Financial Instruments and Institutions

Running head: FINANCIAL INSTRUMENTS AND INSTITUTIONS
Financial instruments and institutions
Name of the student
Name of the university
Author’s note

1
FINANCIAL INSTRUMENTS AND INSTITUTIONS
Table of Contents
Answer to task 1.........................................................................................................................2
Introduction:...........................................................................................................................2
Discussion:.............................................................................................................................2
Authorized deposit-taking instruments:.............................................................................2
Non-ADI financial institutions:..........................................................................................2
Insurer and fund manager:..................................................................................................2
Conclusion:............................................................................................................................3
Answer to task 2.........................................................................................................................3
Introduction............................................................................................................................3
Discussion..............................................................................................................................3
Conclusion:............................................................................................................................7
Answer to task 3.........................................................................................................................7
Introduction:...........................................................................................................................7
Discussion:.............................................................................................................................7
Conclusion..............................................................................................................................8
References..................................................................................................................................9

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FINANCIAL INSTRUMENTS AND INSTITUTIONS
Answer to task 1
Introduction:
The above topic discusses about different types of financial institutions prescribed by
reserve bank of Australia. The topic also depicts about the roles and responsibilities played
by each financial instrument in their own respective fields. RBA have differentiated all the
financial instruments in three parts and discussed the functions of each of them individually.
Discussion:
According to reserve bank of Australia the financial instruments can be divided into
three parts namely-
Authorized deposit-taking instruments:
In this part all the banks, building societies and credit unions are included. The
bank provides wide range of financial services to all the sectors of economy, funds,
management and insurance services. On the other hand, the building societies provide
deposit and home loans to the customers. Similarly, the credit unions also provide
home loans and housing loans.
Non-ADI financial institutions:
Here, the money market corporations, fiancé companies and security market
are included. Money Market Corporation operates into the primary market and
provides borrowing and lending services to the large companies. They also provide
advisory in foreign exchange, capital market. Finance companies provide housing
loans to small and medium business, raise funds by debenture, and share capital issue.
Lastly, securities have been provided by the companies backed by pool of assets
guaranteed by the third parties (Hodge, 2018).

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FINANCIAL INSTRUMENTS AND INSTITUTIONS
Insurer and fund manager:
All the life insurance, general insurance, health insurance provider companies,
public unit trusts, common funds and friendly societies comes into this part. The life
insurance companies provide accident and disability support to the family of insurer
over the money invested on it. General insurance companies cover insurance of
property, motor vehicles,employer’s assets, government securities and equities.
Health insurance companies provide health insurance. Apart from that the
superannuation funds manage employer’s contribution, provide retirement benefits,
the professional fund managers control these. There are public unit trusts also who
pools investors fund s from assets, equity, property,mortgages. Unit trusts are
managed by subsidiary and merchant banks (Bexley et al., 2013). The cash
management trusts provide trust deed to the public and confine investments. Lastly,
there are common funds that receive money from investor under power of attorney.
These funds are usually invested in specific types of assets. In addition to this,
friendly societies are co-operative financial institutions, which are mutually owned
and provide members a trust liker service. The benefits they provide are insurance and
educational binds, benefits linked with funeral, accident, sickness and other (Kidwell
et al., 2016).
Conclusion:
From the above case study, it can be concluded that all the types of financial
institutions prescribed by reserve bank of Australia are having their responsibility in different
areas and they are performing their roles quite well. Hence, the investors also find it easy to
accept services from them.