INTL FCStone 2005 Annual Report Download - page 13

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make prices in more than 8,000 other ADRs and foreign common shares. As a market-maker, the Company
provides trade execution services by offering to buy shares from, or sell shares to, broker-dealers and institutions.
The Company displays the prices at which it is willing to buy and sell these securities and adjusts its prices in
response to market conditions. When acting as principal, the Company commits its own capital and derives
revenue from the difference between the prices at which the Company buys and sells shares. The Company also
earns commissions by executing trades on an agency basis.
International Debt Capital Markets
The Company trades actively in a wide variety of international debt instruments. The Company also invests
in international debt instruments on a proprietary basis and arranges international debt transactions.
The Company trades and invests in international bonds, including both investment grade and higher-
yielding emerging market bonds. The Company generally focuses on smaller issues, such as emerging market
sovereign, corporate and bank bonds that trade internationally on an OTC basis.
The Company provides competitive execution in these bonds to smaller institutions and private banks. The
Company’s staff has substantial experience in this market, which allows the Company to offer customers
superior execution capability. When acting as a principal, the Company commits its own capital to buy and sell
bonds. The Company derives revenue from the difference between the purchase and sale prices. The Company
also earns commissions by executing trades on an agency basis.
The Company periodically invests its own capital in select international bonds. The Company derives
revenue from interest received and the difference between the purchase and sale prices.
The Company periodically identifies opportunities to arrange, structure, purchase or sell debt transactions
on behalf of issuers. These transactions generally involve negotiable emerging market debt instruments that
typically are related to specific commercial transactions, have limited liquidity and price discovery, an absence of
standard documentation and an absence of established settlement procedures. The transactions may be evidenced
by promissory notes, bills of exchange, loan agreements, accounts receivable and other types of debt instruments.
The Company may use its capital to purchase these instruments from emerging market debtors or their
creditors. Due to the limited liquidity of these instruments, the Company may hold them for an indeterminate
period of time before selling them. These instruments are typically sold to international banks and financial
institutions. The Company derives revenue from interest received and the difference between the purchase and
sale prices.
In other transactions, the Company may earn a fee for introducing borrowers and lenders or advising
borrowers on capital raising transactions.
In June 2005, the Company recruited an experienced debt capital markets team based in London and
Florida, thereby adding a structuring capability and expanding the Company’s origination and distribution
capability. This team focuses on private debt placements for financial institutions based in Eastern Europe, Latin
America and the Caribbean.
Foreign Exchange/Commodities Trading
Foreign Exchange Trading
The Company established its foreign exchange trading business in July 2003. The scope of this business
expanded significantly in July 2004 when the Company purchased the specialist foreign exchange trading
business owned by Global Currencies Limited. The combined activities now operate as INTL Global Currencies.
The Company primarily trades select illiquid currencies of developing countries. The Company’s target
customers are financial institutions, multi-national corporations, governmental and charitable organizations
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