Terms for SIE

SEC Securities and Exchange Commission; primary federal regulator of securities markets.

FINRA Financial Industry Regulatory Authority; SRO regulating broker-dealers.

SRO Self-Regulatory Organization; non-government regulator under SEC oversight.

MSRB Municipal Securities Rulemaking Board; writes rules for municipal securities.

SIPC Securities Investor Protection Corporation; protects customer assets if a BD fails.

FDIC Federal Deposit Insurance Corporation; insures bank deposits up to $250,000.

Federal Reserve Central bank that controls monetary policy and interest rates.

Treasury Department Manages U.S. government finances and debt issuance.

IRS Internal Revenue Service; federal tax authority.

NASAA North American Securities Administrators Association; state regulators.

Broker Acts as agent executing trades for customers.

Dealer Acts as principal trading for own account.

Broker-Dealer (BD) Firm acting as both broker and dealer.

Market Maker Dealer providing continuous bid and ask quotes.

Underwriter Firm that helps issuers sell securities.

Syndicate Group of underwriters sharing risk.

Selling Group Group selling securities without underwriting liability.

Transfer Agent Maintains shareholder records and transfers.

Custodian Safeguards customer securities.

DTCC Depository Trust & Clearing Corporation; clears and settles trades.

DTC Depository Trust Company; holds securities electronically.

OCC Options Clearing Corporation; guarantees options contracts.

Primary Market Market where new securities are issued.

Secondary Market Market where existing securities trade.

Third Market OTC trading of exchange-listed securities.

Fourth Market Direct institution-to-institution trading.

ECN Electronic Communication Network; automated order-matching system.

Dark Pool Private exchange for institutional trading.

OTC Over-the-counter market.

NBBO National Best Bid and Offer.

Common Stock Equity representing ownership and voting rights.

Preferred Stock Equity with fixed dividends and priority over common.

Cumulative Preferred Missed dividends must be paid before common.

Convertible Preferred Can be exchanged for common stock.

Callable Preferred Issuer may redeem before maturity.

ADR American Depositary Receipt; foreign stock traded in the U.S.

Rights Short-term right to buy shares at a discount.

Warrants Long-term option to buy shares at a set price.

EPS Earnings Per Share; (Net income – preferred dividends) ÷ shares outstanding.

Market Capitalization Share price × shares outstanding.

Treasury Stock Previously issued shares repurchased by company.

Bond Debt security with fixed interest payments.

Par Value Bond face value, typically $1,000.

Coupon Rate Annual interest based on par value.

Current Yield Annual interest ÷ market price.

YTM Yield to Maturity; total return if held to maturity.

Discount Bond Trades below par.

Premium Bond Trades above par.

Zero-Coupon Bond Issued at discount, no interest payments.

Interest Rate Risk Risk from changing interest rates.

Credit Risk Risk issuer defaults.

Treasury Bills Treasuries with maturities under 1 year.

Treasury Notes Treasuries with 2–10 year maturities.

Treasury Bonds Treasuries with 20–30 year maturities.

TIPS Treasury Inflation-Protected Securities.

Agency Securities Debt issued by government-sponsored entities.

GNMA Ginnie Mae; government-backed mortgage securities.

FNMA Fannie Mae; government-sponsored mortgage entity.

FHLMC Freddie Mac; government-sponsored mortgage entity.

Municipal Bond Debt issued by state or local governments.

GO Bond General Obligation bond backed by taxes.

Revenue Bond Bond backed by project revenue.

BAB Build America Bond; federally taxable municipal bond.

TAN Tax Anticipation Note.

RAN Revenue Anticipation Note.

BAN Bond Anticipation Note.

TRAN Tax and Revenue Anticipation Note.

VRDO Variable Rate Demand Obligation.

ARS Auction Rate Security.

Money Market Securities with maturities under one year.

Commercial Paper Unsecured short-term corporate debt.

Banker’s Acceptance Short-term trade finance instrument.

Repo Repurchase agreement; short-term secured loan.

CD Certificate of Deposit.

Option Contract giving right to buy or sell.

Call Option Right to buy stock.

Put Option Right to sell stock.

Strike Price Price at which option can be exercised.

Premium Price paid for option.

Intrinsic Value In-the-money amount.

Time Value Premium minus intrinsic value.

Breakeven (Call) Strike + premium.

Breakeven (Put) Strike – premium.

Covered Call Call sold against owned stock.

Protective Put Put purchased to hedge stock.

Mutual Fund Investment company pooling investor money.

NAV Net Asset Value; (Assets – liabilities) ÷ shares.

POP Public Offering Price; NAV ÷ (1 – sales charge).

Breakpoint Sales charge discount for large purchases.

12b-1 Fee Marketing and distribution fee.

ETF Exchange-Traded Fund; trades intraday.

ETN Exchange-Traded Note; unsecured debt instrument.

UIT Unit Investment Trust; fixed portfolio.

Variable Annuity (VA) Security with investment subaccounts.

Fixed Annuity Insurance product with guaranteed return.

Surrender Charge Penalty for early withdrawal.

1035 Exchange Tax-free annuity exchange.

REIT Real Estate Investment Trust; avoids double taxation.

Equity REIT Owns income-producing properties.

Mortgage REIT Invests in mortgages.

DPP Direct Participation Program.

Limited Partnership Business structure with pass-through taxation.

Hedge Fund Private investment fund with high minimums.

Systematic Risk Market-wide risk.

Unsystematic Risk Company-specific risk.

Liquidity Risk Risk of not being able to sell.

Inflation Risk Loss of purchasing power.

Reinvestment Risk Risk from falling interest rates.

Call Risk Risk bond is redeemed early.

Prepayment Risk MBS repaid early.

Extension Risk MBS repaid slowly.

Market Order Executes immediately at best price.

Limit Order Executes at specified price or better.

Stop Order Becomes market order when triggered.

Stop-Limit Order Becomes limit order when triggered.

GTC Good-til-canceled order.

AON All-or-none order.

IOC Immediate-or-cancel order.

Settlement Date when trade is completed.

T+2 Settlement two business days after trade.

T+1 Settlement one business day after trade.

Margin Account Account allowing borrowing.

Reg T Federal Reserve margin rule (50%).

Maintenance Margin Long 25%, short 30%.

DERP Dividend dates: Declaration, Ex, Record, Payable.

AML Anti-Money Laundering laws.

SAR Suspicious Activity Report.

CTR Currency Transaction Report.

OFAC Office of Foreign Assets Control.

Structuring Breaking transactions to avoid reporting.

Insider Trading Trading on material nonpublic information.

Front Running Trading ahead of customer orders.

Churning Excessive trading for commissions.

Free Riding Buying and selling without paying.

Selling Away Unauthorized private securities transactions.

Marking the Close Manipulating closing prices.

Painting the Tape Fake trades to mislead market.

U4 Form to register representatives.

U5 Form to terminate representatives.

Statutory Disqualification Felony or securities-related misdemeanor.

BrokerCheck FINRA public disclosure system.

CE Continuing Education.

Regulatory Element Annual compliance training.

Firm Element Annual firm-designed training.