Financial Securities and Regulatory Regulations Flashcards

Flashcards covering key terms, regulatory rules, account agreements, and market processes from the lecture notes.

Rule 147

A rule specifying that intrastate offerings cannot be resold out of state for 6 months following the initial offering.

Coverdell Education Savings Account

An account offering a annual contribution limit of $2,000$ for each child, where the beneficiary can be changed to a family member of the current beneficiary.

Annuity Unit

An accounting measure upon which the amount of payout is determined.

Term Bond

A bond issue in which every bond has the same issue date, interest rate, and maturity, and is quoted on a percentage of par basis.

Serial Bond

Bonds that mature at specified intervals over a pre-determined time period and are quoted in basis points.

Dated Date

The date when interest begins to accrue on new bond issues.

Alternate Display Facility (ADF)

A display facility that provides quotes for Nasdaq securities from unlinked ECNs.

PORTAL

An electronic trading system used for Rule 144A issues.

TRACE

The system where FINRA registered broker-dealers record their corporate, government, and agency bond transactions.

RTRS (Real Time Reporting System)

The platform where municipal bond trades are reported.

EMMA (Electronic Muni Market Access)

A platform providing municipal official statements, preliminary official statements, advance refunding docs, event notices, and real-time reporting of muni bond and note trades.

Rule 144A Issues

Tradable private placement blocks in minimum $500,000$ units between qualified institutional buyers.

Hypothecation Agreement

An agreement that pledges all the securities in a margin account to the broker-dealer as collateral for the margin loan.

Credit Agreement

An agreement that sets the terms and conditions of a margin loan.

Loan Consent Agreement

An optional agreement allowing broker-dealers to lend out a customer's margined securities to other customers for short-selling purposes.

Direct Participation Program (DPP)

A limited partnership that permits the gains and losses of the business to flow through to investors without the partnership having tax liability.

Third Market

Over-the-counter (OTC) trading of exchange-listed securities, which mostly occurs on electronic communications networks (ECNs).

Fourth Market

Institutional trading systems.

Delivery vs Payment Transaction

A transaction that occurs when securities purchased by an institutional customer are delivered to a custodian bank, which is authorized to release payment upon delivery.

Currency Transaction Report (CTR)

A form required to be filled out when a customer conducts more than $10,000$ in currency transactions in a single business day.

Form CRS (Customer Relationship Summary)

A Reg BI requirement summarizing key details of firm services, costs, conflicts of interest, and disciplinary actions taken against the firm.

Pre-Dispute Arbitration Agreement

An agreement signed when opening a brokerage account stating that if a dispute arises, the customer agrees to resolve it through arbitration instead of in court.

SIPC

An organization providing account protection up to $500,000$ per customer, including up to $250,000$ for cash claims.

Broker Call Loan Rate

The interest rate that brokerage firms pay when borrowing from banks using securities as collateral.

Special Memorandum Account (SMA)

A line of credit on a margin account representing excess equity.

Debenture

Corporate debt that is backed solely by the full faith and credit of the issuing corporation.

LEAP

A long-term option contract with up to 39 months to expiry.

Nominal Quote

An approximate price quote indicating 'no quote'.

Work-out Quote

A quote provided when a trader believes a trade can be executed in a given price range and searches the market to execute it.

Special Tax Bond

A municipal bond secured by specified taxes other than ad valorem taxes.

Certificates of Participation

An alternative to G.O. bond issuance that is backed by a pledge of lease revenues.

OBLOSS

An acronym for Open Buy Limits and Open Sell Stops, which represent orders that are reduced on the ex-date.

Variable-Rate Demand Obligation (VRDO)

A security providing a floating interest rate, a stated nominal maturity date, and the option to deliver the security to the issuer for stated face value plus accrued interest.

Placement/Acceptance Ratio

A metric measuring market strength for new municipal issues trading on the secondary market, where a declining ratio indicates increasing underwriter inventory.

13D Notice

A notice required from investors who accumulate a 5% or more position in a security within 5 days of the trade date.

Registrar

An entity responsible for ensuring a corporation does not have more shares outstanding than have been authorized.

Introducing Broker-Dealer

A broker-dealer not permitted to hold customer funds or securities that must sign a clearing agreement with a clearing broker-dealer.