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The Goldman Sachs Group, Inc.
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==== Global Banking & Markets ==== Global Banking & Markets serves public and private sector clients and Goldman Sachs seek to develop and maintain long-term relationships with a diverse global group of institutional clients, including corporations, governments, states and municipalities. Its goal is to deliver to its institutional clients all of its resources in a seamless fashion, with its advisory and underwriting activities serving as the main initial point of contact. Goldman Sachs makes markets and facilitate client transactions in fixed income, currency, commodity and equity products and offer market expertise on a global basis. In addition, Goldman Sachs makes markets in, and clear client transactions on, major stock, options and futures exchanges worldwide. Its clients include companies that raise capital and funding to grow and strengthen their businesses, and engage in mergers and acquisitions, divestitures, corporate defense, restructurings and spin-offs, as well as companies that are professional market participants, who buy and sell financial products and manage risk, and investment entities whose ultimate clients include individual investors investing for their retirement, buying insurance or saving surplus cash. As a market maker, Goldman Sachs provides prices to clients globally across thousands of products in all major asset classes and markets. At times, Goldman Sachs takes the other side of transactions itself if a buyer or seller is not readily available, and at other times Goldman Sachs connect its clients to other parties who want to transact. Its willingness to make markets, commit capital and take risk in a broad range of products is crucial to its client relationships. Market makers provide liquidity and play a critical role in price discovery, which contributes to the overall efficiency of the capital markets. In connection with its market-making activities, Goldman Sachs maintains (i) market-making positions, typically for a short period of time, in response to, or in anticipation of, client demand, and (ii) positions to actively manage its risk exposures that arise from these market-making activities (collectively, inventory). Goldman Sachs executes a high volume of transactions for its clients in large, highly liquid markets (such as markets for U.S. Treasury securities, stocks and certain agency mortgage pass-through securities<ref>Agency mortgage pass-through securities are financial instruments that are backed by a pool of mortgage loans that are guaranteed by a government agency, such as the Government National Mortgage Association (GNMA), the Federal National Mortgage Association (FNMA), or the Federal Home Loan Mortgage Corporation (FHLMC). These securities represent a pro-rata ownership interest in the underlying mortgage loans, which means that the cash flows from the underlying mortgages are passed through to the holders of the securities. The agency mortgage pass-through securities are issued by these government-sponsored entities, which purchase pools of residential mortgage loans from banks, mortgage companies, and other lenders. The loans are typically bundled together and sold to investors as a security. Investors who purchase these securities receive a portion of the principal and interest payments made by the homeowners in the underlying mortgage loans. Agency mortgage pass-through securities are considered to be relatively safe investments, as they are backed by the full faith and credit of the United States government. However, they are subject to prepayment risk, which means that the underlying mortgages may be paid off early, which could result in lower returns for investors.</ref>). Goldman Sachs also executes transactions for its clients in less liquid markets (such as mid-cap corporate bonds, emerging market currencies and certain non-agency mortgage-backed securities) for spreads and fees that are generally somewhat larger than those charged in more liquid markets. Additionally, Goldman Sachs structures and executes transactions involving customized or tailor-made products that address its clients’ risk exposures, investment objectives or other complex needs, as well as derivative transactions related to client advisory and underwriting activities. Through its global sales force, Goldman Sachs maintains relationships with its clients, receiving orders and distributing investment research, trading ideas, market information and analysis. Much of this connectivity between Goldman Sachs and its clients is maintained on technology platforms, including Marquee, and operates globally where markets are open for trading. Marquee provides institutional investors with market intelligence, risk analytics, proprietary datasets and trade execution across multiple asset classes. Its businesses are supported by its Global Investment Research business, which, as of December 2022, provided fundamental research on approximately 3,000 companies worldwide and on approximately 50 national economies, as well as on industries, currencies and commodities. Its activities are organized by asset class and include both “cash” and “derivative” instruments. “Cash” refers to trading the underlying instrument (such as a stock, bond or barrel of oil). “Derivative” refers to instruments that derive their value from underlying asset prices, indices, reference rates and other inputs, or a combination of these factors (such as an option, which is the right or obligation to buy or sell a certain bond, stock or other asset on a specified date in the future at a certain price, or an interest rate swap, which is the agreement to convert a fixed rate of interest into a floating rate or vice versa). Global Banking & Markets generates revenues from the following: '''Investment banking fees''' - Goldman Sachs provides advisory and underwriting services to its clients. Investment banking fees includes the following: * Advisory - Goldman Sachs has been a leader for many years in providing advisory services, including strategic advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense activities, restructurings and spin-offs. In particular, Goldman Sachs help clients execute large, complex transactions for which Goldman Sachs provides multiple services, including cross-border structuring expertise. Goldman Sachs also assists its clients in managing their asset and liability exposures and their capital. * Underwriting - Goldman Sachs helps companies raise capital to fund their businesses. As a financial intermediary, its job is to match the capital of its investing clients, who aim to grow the savings of millions of people, with the needs of its public and private sector clients, who need financing to generate growth, create jobs and deliver products and services. Its underwriting activities include public offerings and private placements of a wide range of securities and other financial instruments, including local and cross-border transactions and acquisition financing. Underwriting consists of the following: ** Equity underwriting. Goldman Sachs underwrites common stock, preferred stock, convertible securities and exchangeable securities. Goldman Sachs regularly receives mandates for large, complex transactions and has held a leading position in worldwide public common stock offerings and worldwide initial public offerings for many years. ** Debt underwriting. Goldman Sachs originates and underwrites various types of debt instruments, including investment-grade and high-yield debt, bank and bridge loans, including in connection with acquisition financing, and emerging- and growth-market debt, which may be issued by, among others, corporate, sovereign, municipal and agency issuers. In addition, Goldman Sachs underwrites and originates structured securities, which include mortgage-related securities and other asset-backed securities. '''FICC''' - FICC generates revenues from intermediation and financing activities. * FICC intermediation - Includes client execution activities related to making markets in both cash and derivative instruments, as detailed below. Interest Rate Products. Government bonds (including inflation-linked securities) across maturities, other government-backed securities, and interest rate swaps, options and other derivatives. Credit Products. Investment-grade and high-yield corporate securities, credit derivatives, exchange-traded funds (ETFs), bank and bridge loans, municipal securities, distressed debt and trade claims. Mortgages. Commercial mortgage-related securities, loans and derivatives, residential mortgage-related securities, loans and derivatives (including U.S. government agency-issued collateralized mortgage obligations and other securities and loans), and other asset-backed securities, loans and derivatives. Currencies. Currency options, spot/forwards and other derivatives on G-10 currencies and emerging-market products. Commodities. Commodity derivatives and, to a lesser extent, physical commodities, involving crude oil and petroleum products, natural gas, agricultural, base, precious and other metals, electricity, including renewable power, environmental products and other commodity products. * FICC financing - Includes secured lending to its clients through structured credit and asset-backed lending, including warehouse loans backed by mortgages (including residential and commercial mortgage loans), corporate loans and consumer loans (including auto loans and private student loans). Goldman Sachs also provides financing to clients through securities purchased under agreements to resell (resale agreements). '''Equities''' - Equities generates revenues from intermediation and financing activities. * Equities intermediation - Goldman Sachs makes markets in equity securities and equity-related products, including ETFs, convertible securities, options, futures and over-the-counter (OTC) derivative instruments. As a principal, Goldman Sachs facilitates client transactions by providing liquidity to its clients, including by transacting in large blocks of stocks or derivatives, requiring the commitment of its capital. Goldman Sachs also structures and make markets in derivatives on indices, industry sectors, financial measures and individual company stocks. Goldman Sachs develops strategies and provides information about portfolio hedging and restructuring and asset allocation transactions for its clients. Goldman Sachs also works with its clients to create specially tailored instruments to enable sophisticated investors to establish or liquidate investment positions or undertake hedging strategies. Goldman Sachs is one of the leading participants in the trading and development of equity derivative instruments. Its exchange-based market-making activities include making markets in stocks and ETFs, futures and options on major exchanges worldwide. Goldman Sachs generates commissions and fees from executing and clearing institutional client transactions on major stock, options and futures exchanges worldwide, as well as OTC transactions. Goldman Sachs provide its clients with access to a broad spectrum of equity execution services, including electronic “low-touch”<ref name=":0">In the context of equity execution services, "low-touch" and "high-touch" are terms used to describe different levels of client interaction and service provided by the brokerage firm. Low-touch execution refers to a more automated approach to trading where orders are executed electronically with little human intervention. In this case, the client typically uses a trading platform to enter and execute trades, and the brokerage firm provides little in the way of advice or assistance. The focus is on speed, efficiency, and low cost. On the other hand, high-touch execution refers to a more personalized approach to trading where clients work closely with a team of brokers to execute trades. This approach is typically used for more complex trades that require expert advice, market insights, and customized execution strategies. High-touch trading often involves more communication between the client and the brokerage firm, as well as more hands-on support throughout the trading process. In summary, low-touch execution is more automated and less personalized, while high-touch execution involves more human interaction and customization.</ref> access and more complex “high-touch”<ref name=":0" /> execution through both traditional and electronic platforms, including Marquee. * Equities financing - Includes prime brokerage and other equities financing activities, including securities lending, margin lending and swaps. Goldman Sachs earns fees by providing clearing, settlement and custody services globally. In addition, Goldman Sachs provides its hedge fund and other clients with a technology platform and reporting that enables them to monitor their security portfolios and manage risk exposures. Goldman Sachs provides services that principally involve borrowing and lending securities to cover institutional clients’ short sales and borrowing securities to cover its short sales and to make deliveries into the market. In addition, Goldman Sachs is an active participant in broker-to-broker securities lending and third-party agency lending activities. Goldman Sachs provides financing to its clients for their securities trading activities through margin loans that are collateralized by securities, cash or other acceptable collateral. Goldman Sachs earns a spread equal to the difference between the amount Goldman Sachs pays for funds and the amount Goldman Sachs receives from its client. Goldman Sachs executes swap transactions to provide its clients with exposure to securities and indices. Goldman Sachs also provides securities-based loans to individuals. '''Other''' - Goldman Sachs lends to corporate clients, including through relationship lending<ref>Relationship lending is a type of lending where a bank or other financial institution builds a long-term relationship with a borrower, providing them with a range of financial services over time. The focus of relationship lending is on developing a long-term partnership between the lender and borrower, rather than simply providing short-term financing.</ref> and acquisition financing. The hedges related to this lending and financing activity are also reported as part of Other. Other also includes equity and debt investing activities related to its Global Banking & Markets activities.
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