Financial practices before the invention of computers were conducted with reliance upon tangible forms of security and personal insights into the character of those who were pledging collateral. By examining the practices by which business was conducted at those times it is possible to understand the traditions upon which today’s business should be conducted. In this section we review passages from contemporaneous textbooks which describe those traditions that are most relevant for the management of today’s financial market evolution.


Tuesday, March 5, 2019

Securities Processing: Big Tasks Lie Ahead

by Ed Blount (Reprinted from the Banking Journal of the American Bankers Association, May 1981)

Author: Ed Blount

The nature of the securities business has changed dramatically in the last decade. A full understanding of those changes is necessary in order to appreciate the challenges facing the industry in the Eighties. Impressive strides have been made since the days of the back-office disaster scenes in the late Sixties and early Seventies that forced over 100 brokerage firms to go "belly up." Virtually all major brokers have automated their order entry process. Many have also developed the ability to interface these front-end systems with clearing banks, other brokers, and with industry facilities such as the Trade Comparison Service, Continuous Net Settlement System, and Institutional Delivery System each of which was introduced in the last decade.

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Categories: Traditions


Tuesday, May 12, 2015

The Origins of Trusts and Fiduciary Duties

Foundations of Capital Markets

Author: David Schwartz

A trust is a fiduciary arrangement that allows one party to transfer assets to a third party, or trustee, to hold assets on behalf of a single beneficiary or a number of beneficiaries. Trusts have myriad uses and are employed across a wide variety of property transfers, transactions, testamentary bequests, and business arrangements. They are so useful because they are so very flexible and can be custom tailored to restrict exactly how the assets are to be managed during the life of the trust, as well as how, when, and in what form the assets pass to the beneficiaries. Because trusts have such utility and so widely used, a large body of law has grown up around them. And since a key aspect of trusts is the placement of things of value in the care of a third party, the trustee, a corollary concept, fiduciary duty, has also grown to address the rights and responsibilities of trustees with respect to the property in their care, and with respect to the trust’s beneficiaries. Because of their importance to modern commerce and life events in general, over the course of three short posts, we will examine the history of trusts and the development of fiduciary duties, application of trust and fiduciary principles to investment funds, and we will explore some of the powers and duties of fund trustees. In this first post, we examine the historical development of trusts and the fiduciary concept.

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Wednesday, October 16, 2013

Collateral Analysis:

“Among the duties of the president is that of constantly reviewing the credits of the bank.”

Author: David Schwartz
Board RoomNineteenth century commercial banks earned their profits to a large extent by financing the inventories of shopkeepers and their supply chains. The expansion of manufacturing during the Industrial Revolution resulted in lower prices, broader distribution channels and an explosion in mercantile trade. As the first department stores were developed in the early 1850s, merchants increasingly asked for greater lines of credit to support their growing businesses.
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Categories: All, Traditions