market participants

Question 1

retail investors

Answer 1

individual investors who buy and sell public debt and equity securities through their retirement/ brokerage accounts with their personal money

Question 2

accredited investros

Answer 2

anyone at this status can trade in private securities not registered with the SEC including private placements and venture capital

any individual or couple with a net worth over 1m or with an annual income of $200k/ 300k

Question 3

institutional investor

Answer 3

only legal entities like real estate investment trusts, insurance companies, credit unions, mutual funds, etc.

These investors trade securities on behalf of their shareholders and they buy and sell in large quantities

Question 4

broker-dealer

Answer 4

broker- an entity that trades securities on behalf of its clients
dealer- trades on behalf of itself

Question 5

introducing broker

Answer 5

does not execute trades for the client but receives order from customers and they contract them with a clearing firm to process them

Question 6

clearing firm

Answer 6

holds customer accounts and are responsible for clearing trades and ensuring those trades reach settlement

Question 7

prime brokers

Answer 7

a unique type of broker that only serves large financial institutions to allow them to outsource activities like trade clearing and settlement or risk performance and analysis

Question 8

investment advisors

Answer 8

an individual or company that is registered with state regulators/ the SEC and is paid by their clients to provide advice about securities investments, manage investment portfolios, or provide financial planning or brokerage services

Question 9

municipal advisors

Answer 9

provides advice on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities or someone who undertakes a solicitation of a municipal entity

firms that provide municipal advisory have to register with the MSRB and SEC

Question 10

issuers

Answer 10

legal entities that fund their operations by selling securities to investors

issuers aare required to make filings with the SEC if they sell to the general pubic

Question 11

underwriters

Answer 11

facilitate the sale and distribution of an issuers securities by pricing the securities, purchasing the securities directly from the issuer, then selling the securities to investors

Question 12

market makers

Answer 12

brokerage firms that engage in providing day to day availability for public investors who want to buy or sell stocks and bonds

to maintain sales liquidity, most market makers will buy or sell securities of a defined set of companies to broker dealers who are members of the exchange

Question 13

trustee

Answer 13

an individual, broker, bank, or other organization charged with governing a trust

they manage and administer investments and other assets on behalf of the beneficiary of the trust and usually have a fiduciary responsibility to the trust

Question 14

custodian

Answer 14

the entity that actually holds the assets of the trust for safekeeping

Question 15

transfer agent

Answer 15

usually a bank or a trust company that acts an an intermediary between securities issuers and holders

they are responsible for maintaining security holder records and distributing dividends on behalf of the issuing company

Question 16

Depository trust clearing corporation (DTCC)

Answer 16

manages the daily clearing and settlement processes for most securities transactions in the US