Regulatory entities agencies and market participants Flashcards
Securities exchange act 1934
Primary securities regulator
Broker dealers
Self regulatory organizations
Reporting companies
Broker dealer may not claim registration
The commission has passed upon or approved the broker dealers financial standings, business, or conduct
A B C
Agents brokers commissions
P D M
Principal - dealer - markup/mark down
Not a security
Insurance guaranteed whole life universal life term life endowment fixed and equity indexed annuity policies
Retirement plans (IRAs, Keogh, pensions)
Qualified retirement plans
Associated persons = DEBOP
Directors employees branch managers officers and partners
Sanctions for broker dealers “BROKER CHECK”
Don’t arrest
Don’t jail
Don’t impose injunctions
self regulatory organization’s SROs
FINRA Financial industry regulatory authority
CBOE Chicago Board options exchange
MSRB Municipal bond rulemaking board
Margin accounts
Put half down then borrow the rest from a regulated entity
Commodities commodity futures and currencies
Not covered by SIPC meaning they are not securities
SIPC Insurance covers
Missing assets
NOT Market loss
FDIC (Federal deposit Insurance corporation)
Covers member banks up to $250,000
Accredited
Net worth of 1 million excluding equity in home
Or annual income of 200,000 for two most recent years
Investment advisor
Investment advice
Business advice
Compensated for advice
Issuers and underwriters
Issuer (IPO)
Common stock
Primary sell
Traders and market makers
Like a car deal
MM- Manheim
Traders- me
OTC Over the counter
Unlisted also known as Lindsay Lohan stock he pulling trash stock or D-list
MMBB
MARKET MAKERS
Market makers by at the bid
And sell at the ask
Broker dealers
Buy at the ask
Sell at the bid
100 shares equals
1 round lot
Firm quote
A price quote that guarantees a bid or ask price up to the amount quoted
T + 2
Corporate stock
T +1
US government/federal securities
T
Trade Date
Or
Same Day
A market maker in an over-the-counter stock
Buys at the bid price
CUSIP number
Committee uniform security identification procedures meaning
Personal identification number for each individual security nine digits
Custodians and trustees
Persons or institutions responsible for making all investment decisions
Transfer agents
In charge of good delivery
UPC- uniform practice code
DTCC
Depository trust and clearing company
Worlds largest securities depository
WORLD
NSCC
National securities clearing corporation
U.S.
Primary market
Capital markets such as stock and bond markets
Primary focus is to raise funds in the public and private sector
IPO
SPO
APO
Primary sell
Securities act of 1933
Primary issuer transaction
(Manheim)
IPO- initial public offering’s
APO- additional public offerings
Secondary non-issuer transaction in the primary market
(Me/individual)
Financial markets
Stock market
Bond market
Physical or electronic venue
Regulated conduct rules
Secondary offering
Sales by one or more major stockholders to the public
Proceeds paid to stockholders
Third market
NASDAQ (Apple)
Fourth market
Unlisted
No middleman
ECNs - Electronic communication networks- Open 24 hours examples are Merrill Lynch and Raymond James
3 Ps of 1933
Paper prospectus and primary
IPO
Which of the following statements regarding the market is true?
It is composed of listed securities traded OTC
The federal reserve board
Helps regulate the economy
Monetary policy
Quickest way to make changes to air money supply
Fiscal policy
Based on taxes and spending
M1
Cash +demand deposits (checking)
M2
M1 +CDs +money market mutual funds +overnight repose
M3
M2 + negotiable CDs + term repos
Open markets activities and impact on the economy
T-bills FOMC
Most frequently used
Raising interest rates or tightening contracts
Bearish
fight inflation
Bond prices decrease
Lowering interest rates or loosening money supply
Bullish
Risks inflation
Bond prices increase
BBFF
Bank to bank for federal funding
Prime rate
Best rate
Big banks to big customers
The general public usually pays prime + one or two
Financial statements
Assets = liabilities + net worth (Equity)
Working capital
Current assets Minus current liabilities
Recession
Two consecutive quarters
Depression
Six consecutive quarters
Leading indicators and measures for economic factors
The money supply = M2
Price rule of S&P 500 index of common stocks
New building permits for private housing units
Orders for consumer durable goods and materials
Average weekly production hours in manufacturing
Coincident
Usually mirror movements of the business cycle (same time)
Employees on non-agricultural payrolls
The index of industrial production
GDP
Lagging
Consumer price index for services
Prime rate charged to banks
Labor cost per unit of output for manufactured goods
Average duration of unemployment
Inflation
Rate at which;
goods and services is rising
purchasing power of currency is falling
Deflation
Decline in prices
Stagnation
Prolonged periods of slow economic growth with high unemployment rates
Stagflation
Combination of inflation and high unemployment