Securities Industry Essentials Exam Part 1 (Capital Markets)
Introducing Broker
A broker in the futures markets who has a direct relationship with a client and makes investment recommendations, but delegates the work of the floor operation and trade execution to another futures merchant, typically a futures commission merchant.
MSRB (Municipal Securities Rulemaking Board)
A regulating body that creates rules and policies for investment firms and banks in the issuing and sale of municipal bonds, notes and other municipal securities by states, cities and counties.
Retail Investor
An individual investors who buy and sell securities for their personal account, and not for another company or organization.
Divisons in SEC
-Division of Corporation Finance -Division of Enforcement -Division of Investment Management -Division of Economic and Risk Analysis -Division of Trading and Markets
IRS (Internal Revenue Service)
A U.S. government agency responsible for the collection of taxes and enforcement of tax laws.
Prime Broker
A broker that facilitates large, active trading operations such as hedge funds.
Clearing Broker
A member of an exchange that acts as a liaison between an investor and a clearing corporation that ensures that a trade is settled appropriately and the transaction is successful.
Self-Regulating Organizations (SRO)
A non-governmental organization that has the power to create and enforce industry regulations and standards that aims to protect investors through the establishment of rules that promote ethics and equality.
SIPC (Securities Investor Protection Corporation)
A nonprofit corporation created by an Act of Congress to protect the clients of brokerage firms that are forced into bankruptcy by providing insurance for brokerage customers giving up to $500,000 coverage for cash and securities held by the firm.
NASAA (North American Securities Administrators Association)
A voluntary organization, established in 1919, of securities regulators whose aim is to protect investors who buy securities or investment advice by educating the public, investigating violations of state and provincial law and filing enforcement actions.
FINRA (Financial Industry Regulatory Authority)
An SRO that has the ability to license securities dealers and is responsible for overseeing arbitration between investors, brokers and other involved parties.
Department of Treasury
An executive department for the United States government that manages government revenue, producing currency and coinage, collecting taxes and paying bills of the US government, managing the federal finances, supervising banks and thrifts, and advising on fiscal policy.
FDIC (Federal Deposit Insurance Corporation)
An independent federal agency insuring deposits in U.S. banks and thrifts in the event of bank failures by insuring deposits up to $250,000 per depositor.
Securities and Exchange Commission (SEC)
An independent, federal government agency responsible for protecting investors, maintaining fair and orderly functioning of securities markets, and facilitating capital formation.
Accredited Investor
An individual or entity that can deal with securities not registered with financial authorities by satisfying one of the requirements regarding income ($200,000-$300,000+), net worth ($1M+), asset size ($5M+), governance status or professional experience (partner, exec, director, etc.)
Broker-Dealer
An individual or firm in the business of buying and selling securities, operating as both a broker and a dealer, depending on the transaction. They act as a broker when executing orders for clients and act as a dealer when trading for own account.
CBOE (Chicago Board Options Exchange)
An options market (exchange) that focuses on options contracts for individual equities, indexes and interest rates.
Institutional Investor
An organization that invests on behalf of its members and face fewer protective regulations. - mutual funds - hedge funds - endowment funds - pension funds - commercial banks - insurance companies
Investor
Any individual or group who commits capital to stocks, bonds, commodities, mutual funds, exchange-traded funds (ETFs), options, futures, foreign exchange, gold, silver, retirement plans or real estate with the expectation of financial returns.
Authority and jurisdiction of SEC
Division of enforcement will recommend the commencement of investigations of securities law violations and prosecute such cases on behalf of the Commission. They can seek injunctions (prevents further violations) or can penalize or impose disgorgements on companies or individuals while working with the DoJ.
Division of Corporation Finance
Ensures investors are provided with material information in order to make informed investment decisions
Division of Trading and Markets
Establishes and maintains standards for fair, orderly and efficient markets
Division of Enforcement
In charge of enforcing SEC regulations by investigating cases and prosecuting civil suits and administrative proceedings
Division of Economic and Risk Analysis
Integrates financial economics and data analytics into the core mission of the SEC
Division of Investment Management
Regulates investment companies, variable insurance products and federally registered investment advisors
Federal Reserve
The central bank of the United States that is made up of a Board of Governors, 12 physical banks, and an Open Market Committee that conducts our monetary policy, stabilizes our financial system, regulates financial institutions, and promotes consumer and community protection.
