unit 1 Flashcards
(25 cards)
cash settlement
requires delivery of securities from the seller and payment from the buyer on the same day a trade is executed
must be on the spot for delivery.
both parties must agree before the trade takes place for it to occur
fill or kill order
an instruction to fill the order immediately or kill the order completely
immediate or cancel order
if only a portion of the order can be filled, it is, and the remaining unexcited portion is canceled
all or none order
AON orders must be executed in their entirety or not at all, can be day orders or GTC orders.
they can be held for the day or beyond
GTC order
valid until executed or canceled.
automatically canceled if unexecuted at the opening of the day or at the close of the day
day order
valid only until the close of trading on the day
market order
buy or sell; it is executed immediately at the best available price
who trades in the OTC market?
market makers
stop limit order
stop price does not become a live working order until the stock trades at our through the stop price
shelf registration
this allows issuers to register a new issue security without selling the entire issue at once
can sell limited portions of the issue over a two year period and for WKSI companies, a three year period without reregistering the security
underwriter
acts as a BD and works with an issuer to bring its securities to the market and sell them to the public
SEC act of 1933
protects investors by:
- requiring registration of new issues (unless exempt)
- requiring an issuer to provide full and fair disclosure about itself and the offering
- requiring an issuer to make available all material information necessary for an investor to judge the issues merit
- regulating the underwriting and distribution of primary issues
- providing criminal penalties for fraud in the issuance of new securities
preliminary prospectus (red herring)
can be used as a prospecting tool to gauge investor interest and gather indications of interest.
POP (final price) is not required for the preliminary prospectus, must be available to any customer who expresses interest
primary market transaction
if the issuer of a security is receiving funds from an offering
prospectus delivery rules (an investor that buys a new security in the secondary marketwise be entitled to the following timelines)
- for IPOs of NMS securities - 25 days
- for APOs of NMS securities - 0 days
- for IPOs of non-NMS securities - 90 days
- for APOs of non NMS securities - 40 days
access to a prospectus on the SEC website is sufficient to meet delivery requirements
regulation D
SEC does not require registration of an offering under Regulation D as long as there are no more than 35 non accredited investors
amount of capital that can be raised is unlimited
Rule 147
offerings that take place entirely in one state are exempt from registration when the issuer has its principal office in the state and all purchasers are residents of the state
- it receives at least 80% of its income in the state
- at least 80% of the issuers assets are located within the state
- at least 80% of the offering proceeds are used within the state
- majority of company’s employees work in the state
- may not be resold to nonresidents of the state for 6 months after the initial purchase
carrying firm
- carries customer accounts and accepts funds and securities from customers
- have the capability to do trade executions
- clear and settle transactions
- take custody of customer funds and securities
- handle all back office tasks such as sending trade confirmations
bid
highest amount someone is willing to pay for the security
when an option trades
settlement is the next business day (t+1)
equity option exercise
transaction must be completed by the second business day (t+2) after the exercise
equity security
also known as participating preferred
ADR
domestic security representing a foreign security in US markets
bought stock in a foreign company at x and then sold it for more than x, what are the tax consequences of this?
taxed as a capital gain
