Chapter 1 Flashcards
(40 cards)
Member firm
broker/dealer belonging to a self-regulatory organization (SRO), such as FINRA or NYSE, or both
Self- regulatory organization (SRO)
an organization that is authorized to enforce standards and requirements related to securities trading and brokerage
Bond
a debt obligation in which the borrower promises to pay a set coupon rate until the issue matures, at which the principal is repaid
coupon rate
the interest rate that a bond issuer will pay to a bondholder
Mutual fund
a professionally managed open-end investment company issuing redeemable securities in a continuous offering of shares
Prospectus
a full and fair risk disclosure document required by the Securities and Exchange commission for all new offering of nonexempt securities
Underwriter
A broker/dealer or investment bank that helps a company in offering and distributing securities to the public
self-regulatory organizations (SROs) or FINRA Designated Examining Authority (DEA)
responsible for writing rules and regulations used to enforce the securities laws imposed by the SEC
Financial Industry Regulatory Authority (FINRA)
a nongovernment organization that was authorized by congress to protect investors by ensuring that the broker/dealer industry operates in a fair and honest manner. It is the largest self regulatory organization(SRO). Was created in 2007 through the merger of the National Association of Securities Dealers (NASD) and the NYSE
FINRA
Jurisdiction over all broker/dealers and registered representatives and has the authority to discipline firms and individuals who are in violation of the rules. It regulates trading in securities, including stocks, corporate bonds, mutual funds, variable annuities and futures and options contracts on securities
Uniform Practice Code
relates to dealings between broker/dealers, covering all transactions in nonexempt securities and requiring orderly completion of dealer-to-dealer transactions
Rules of Conduct/ Rules of Fair Practice
address dealings with the public on the part of broker/dealers as member firms
Code of Procedure
outlines the procedural process in the vent of violations of trade practice rules
Code of Arbitration
Is concerned with settling disputes between broker/dealers, registered representatives, and the public
Municipal Securities Rulemaking Board (MSRB)
- regulates all matters related to the underwriting and trading of state and municipal securities.
- regulates but does not have enforcement powers so it really has no regulatory power over the municipalities who issue municipal securities
Chicago Board Options Exchange (CBOE)
Cboe Global Markets is the parent company of this exchange.
a self regulatory organization (SRO) with a mission of operating fair and orderly markets
Department of Treasury
Oversees the U.S economic and financial systems.
Collects, borrows, spends, and prints money
Federal Reserve System
the central bank of the United States
Conducts the nation’s monetary policy,
Promotes the stability of the financial system,
promotes the safety and soundness of individual financial institutions, Fosters payment and settlement system safety and efficiency, Promotes consumer protection
T+4
wHEN A CUSTOMER MUST PAY FOR A SECURITY
T+2
regular way settlement
Fidelity Bond
insurance policy that pays the employer money in the case of employees’ theft
SIPC (Securities Investor Protection Corporation)
A non-profit membership corporation established to provide protection for customers of a SIPC member firm (broker/dealer). If the broker/dealer fails, SIPC provides $500,000 in total coverage.
Federal Deposit Insurance Corporation (FDIC)
insures customer deposits up to $250,000if a bank fails. Does not insure securities, mutual funds, or similar types of investments that banks and thrift institutions may offer.
dealer
When a firm effects trades for its own account, it is acting in a principal capacity. When a firm acts in this capacity, it is considered a
