Download Regulation of Securities Markets: Agencies, Acts, and Organizations and more Exams Business Economics in PDF only on Docsity! SIE (Regulatory Entities, Agencies & Market Participants) Securities Act of 1933 - Regulates (primary market) the new issuance market, Requires issuers to register their securities when selling to the public, for money raisers and issuers Securities Exchange Act of 1934 - Regulates the trading of securities in the secondary market, for BD's and Exchanges Investment Company Act of 1940 - Regulates companies that are formed to pool investors' money and invest those funds in securities (mutual funds) Investment Advisers Act of 1940 - Legislation governing who must register with the SEC as an investment adviser (regulates Investment Advisers and firms that earn fees) Securities Investor Protection Act of 1970 - Amended the 1934 Act (protects customers from BD's bankruptcy Insider Trading and Securities Fraud Enforcement Act of 1988 - Defines the penalties for the misuse of non-public information The USA PATRIOT Act of 2001 - Covers Anti-Money Laundering (AML) policies that financial firms must follow SEC - Regulates all exchanges and trading markets, securities' industry primary regulatory body BD's that do not comply with the SEC are subject to: - censure, limits on activities or operations, suspension of registration, fines or revocation of registration Self-Regulatory Organizations (SRO's) - private organizations that develop and enforce standards governing the behavior of their members in their jurisdiction on behalf of the SEC FINRA, CBOE, MSRB are examples of - Self-Regulatory Organizations FINRA - Regulates all matters related to investment banking, trading on the OTC, trading in NYSE securities, and the conduct of FINRA members FINRA Conduct Rules - establish relationship between firms and their customers FINRA Uniform Practice Code - Cover technical aspects of trading ex. good delivery of securities, payment procedures of dividends and interest on bonds FINRA Code of Procedure - Covers the enforcement of rules and details punishments for violators FINRA Code of Arbitration - Dispute resolution process ran by FINRA to avoid tradition court system Chicago Board Options Exchange (CBOE) - carries customer accounts and accepts funds, they do trade executions, clear and settle transactions Fully Disclosed Firm or Introducing BD - introduce customers to clearing firms, clearing firms hold the funds for introducing firms' customers. They have lower net capital requirement than carrying firms Prime Brokers - Brokers that provide services including custody, administration, lending, short borrowing, and trading Executing Broker - Handle all trade placed by customer Investment Advisers - Those who receive a fee for investment advice must register under the Investment Advisers Act of 1940 by passing 65 or 66 Municipal Advisors - Provides advice to or on behalf of a municipal entity with respect to municipal products, undertakes a solicitation of a municipal entity Issuers and Underwriters - Issuers offer their security to the public to raise capital, Underwriters work with the issuer to bring their security to the market Traders and Market Makers - Any entity willing to accept the risk of holding a particular security to facilitate trading and provide liquidity Custodians - An institution or person responsible for making all investment and distribution decisions in an account maintained in the best interest of another Trustee - Institution or person responsible for making all investment and distribution decisions in an account maintained in the best interest of another who has been legally appointed to do so DTCC - Depository Trust and Clearing Corporation is the largest securities depository in the world, provides custody services for virtually all securities Options Clearing Corporation (OCC) - Corporation that handles options transactions on the stock exchanges and is owned by the exchanges. It issues all options contracts and guarantees that the obligations of both parties to a trade are fulfilled Third Market (OTC Listed) - Nasdaq Inter-market trading, market in which exchange listed securities are traded in the OTC market, BD's registered as OTC market makers in listed securities can effect third-market transactions, *trades must be reported to the Consolidated Tape within 10 seconds of execution Fourth Market - market for institutional investors in which large blocks of stock both listed and unlisted trade in transactions unassisted by BD's. These take place through electronic communication networks
