Introduction SIE Flashcards
Who are the industry participants?
Types of investors, broker dealers, investment companies, industry regulators, issuers, Exchanges and over the counter market (OTC)
What are the types of investors?
Retail investors, accredited investors and institutional investors
Retail investors:
Individuals who purchases securities for their own accounts. Generally execute smaller trades and do not possess the degree of investing sophistication that are more seasoned Institutional investors have
Accredited investors
Investors earned income that exceeds $200,000 or $300,000 together with spouse or have a net worth of 1 million either alone or together with a spouse
Institutional investors
Sophisticated and experience investors such as mutual funds, insurance companies, and pension funds institutional investors would be considered accredited
Broker dealers
A firm that can act in the capacity of a broker or a dealer in transaction with customer. As a broker the firm acts as an agent that execute orders on behalf of the client, dealer acts as a principal and trades for its own account
Investment companies
A corporation or trust that pool clients money and invested it in various types of securities. There are two General categories of investment companies open ended commonly known as mutual fund” and close ended
Industry regulators
The US Congress, the securities and exchange commission SEC, self regulatory organizations
The US Congress
Enacted and revise several major laws that structure of the US securities market.
- The securities act of 1933 known as the 33 act.
- Securities exchange act of 1934 known as the 34 act.
- The investment advisers act of 1940
- The investment company act of 1940
The securities and exchange commission SEC
A federal agency created by Congress in 1934 and is charged with administering federal security laws and providing federal oversight of the securities industry
Self regulatory organizations (SROs)
- Financial industry regulatory authority (FINRA):
Largest non-government regulatory for a securities from doing business in the United States. - The municipal securities rulemaking board (MSRB):
Rule making authority for a dealer banks and security firms engaged in municipal securities activities - Stock and options exchanges:
Exchanges such as the Chicago board options exchange are also mandated to regulate the market in which they participate and their personnel.
Issuers
Companies that sell securities such as stocks and bonds to the general public for the purpose of financing it’s new ventures or operations operations:
- Domestic and foreign corporation’s (Is your stocks and corporate bonds)
- The US government (Is your US government securities or treasury securities)
- State and local governments (Issue municipal securities)
Exchanges
A marketplace in which securities, futures, options and other financial instruments are listed and traded
Over the counter market OTC
Marketplace for a securities that are not listed or traded on an exchange. Traded through telephone and computer networks connecting dealers
