2: 2nd Market Flashcards
Describe the Secondary Market.
All subsequent trading in the securities issued in the primary market
Who are the key players in the secondary market?
- brokers and dealers, and the firms for which they work
- floor brokers
- specialists
- RCMMs
What is a broker-dealer?
an individual or company that is licensed to buy investment products for or sell them to clients
What is the difference between a broker and a dealer?
Broker - buys/ sells securities on behalf of investors Dealer - trades for his own accounts
What is a registered representative?
an individual or company affliliated with a broker/dealer
What is the Series 7 Exam?
a licensing exam administred by FINRA (F IN R A) which qualifies the broker to solicti, purchase, and/or sell all securities products
How does the Series 6 Exam differ from the Series 7 Exam?
the Series 6 exam provides licensing to sell mutual funds, inital offerings of closed-end investment companies, and variable annuities
What did the Gramm-Leach-Bliley Act do?
repealed the Glass-Steagall Act (a.k.a. the Banking Act of 1933) which prohibited investment banks from operating commerical banks and vice versa
How does a floor broker differ from a floor trader?
A floor broker execute trades on an exchange floor on behalf of their firm’s clients. Floor traders (a.k.a. RCMMs) buy and sell for their own account and serve as back-up specialists.
Name the responsibilities of the specialist.
charged with making a market in a particular security by (1) managing the aucition process, (2) excecuting orders for floor brokers, (3) serving as a catalyst, and (4) providing capital and stabilizing prices when needed.
