SIE Lesson 1: SROs, Customers & Market Participants

A set of vocabulary flashcards covering key terms and concepts from the lecture on SROs, customers, and market participants in finance.

Accredited Investor

An individual with a net worth ≥ $1 million (excluding primary residence) or income ≥ $200,000 ($300,000 joint); entities with a net worth ≥ $5 million.

Self-Regulatory Organizations (SROs)

Organizations that regulate members in the securities industry, such as FINRA and MSRB.

Broker-Dealer

A broker acts as an agent earning commission, while a dealer acts as a principal trading for their own account.

Clearing Firms

Firms that handle back-office operations, settle trades, maintain custody of securities, and keep records.

Registered Representatives

Individuals who must pass exams (like SIE + Series exams) and be registered with FINRA and state regulators to solicit and execute trades.

Custodians

Entities that safekeep customer assets, including cash and securities, and are used by investment advisors and institutions.

Transfer Agents

Entities that keep records of shareholders, cancel certificates, issue new ones, ensure security authenticity, and distribute dividends.

Trust Accounts

Accounts managed by a trustee for a beneficiary, with types including revocable (can be changed) and irrevocable (cannot be changed).

Market Makers

Entities that provide liquidity by quoting bid and ask prices.

Depository Trust & Clearing Corporation (DTCC)

An organization that holds securities electronically and clears trades.

Options Clearing Corporation (OCC)

An organization that clears listed options trades.

SIE Exam Tips

Important study points such as the differences between broker vs dealer, accredited investor thresholds, and the roles of clearing firm, custodian, and transfer agent.