Outline The Role of the Capital Markets - Economic Function
- Continuous Pricing Function
- Fair Pricing Function
- National Exchanges
- Regional Exchanges
- Trading Systems
- The Specialist System
- SuperDOT and NYSE Direct+
- Marketmakers
- Circuit Breakers and Trading Curbs
Outline - The Small Order Execution System (SOES)
- The Nasdaq National Market
- The Nasdaq Small Cap Market
Outline Regulation - The Exchanges
- The SEC
- The NASD
- SIPC
Ethics - Illegal vs. Unethical
- The Chartered Financial Analyst Program
- History
- The CFA Program Exams
- AIMR Standards of Professional Conduct
The Role of the Capital Markets Continuous Pricing Function Fair Pricing Function
Economic Function
Economic Function
Economic Function: An Example
Economic Function: An Example
Economic Function
Economic Function
Continuous Pricing Function
Fair Pricing Function
The Role of the Capital Markets
The Exchanges
Trading Systems Specialists are charged with making a fair and orderly market in one or more assigned securities at posts on the exchange floor. SuperDot and NYSE Direct+ are electronic systems enabling NYSE firms to send market and limit orders directly to the specialists’ posts. Marketmakers are groups of competing individuals who maintain a fair and orderly market through open outcry trading in pits on the exchange floor.
Circuit Breakers and Trading Curbs
The Nasdaq Stock Market The Nasdaq (National Association of Securities Dealers Automated Quotations) market is a worldwide computerized linkup of brokerage firms, investment houses and large commercial banks. The Nasdaq market is sometimes still erroneously called the over-the-counter (OTC) market.
The Nasdaq Stock Market In Nasdaq trading, bids and offers for securities ranging from small unfamiliar firms to some of the largest companies in the world are posted to an electronic bulletin board. Trades of up to 1,000 shares can be executed in less than one minute via the Small Order Execution System (SOES).
The Nasdaq Stock Market The Nasdaq stock market comprises two distinct markets: - The Nasdaq National Market. The largest and most established firms in the Nasdaq market are the national market issues.
- The Nasdaq Small Cap Market. These small-cap issues have a low level of capitalization.
The Over-the-Counter Market Today, the term OTC equity security refers to an equity security that is not traded on Nasdaq or a national or regional exchange. OTC securities trade in two ways: - The OTC Bulletin Board (OTCBB) is a regulated quotation service providing real-time information.
- Data on the smallest and often most speculative pink sheet stocks can be accessed via the Internet.
Third and Fourth Markets The trading of listed securities in the Nasdaq market is known as the third market. Direct trades between large institutional investors comprise the fourth market.
The Over-the-Counter Market
The Markets
Regulation The Exchanges have rules regarding… - the financial capacity of members serving as stock specialists
- the financial & market activity of listed firms
- the disclosure & annual reporting of listed firms
Regulation The Securities and Exchange Commission (SEC) was established … - to ensure that investors have adequate information to make an informed investment decision
- to help prevent price manipulations and abuses like the Ponzi scheme
Two primary acts influencing the investment industry today are the Securities Act of 1933 and the Securities Exchange Act of 1934.
Regulation The National Association of Security Dealers (NASD) is a self-regulatory body that licenses brokers and generally oversees the trading practices of OTC securities. The Securities Investor Protection Corporation (SIPC) protects investors from loss due to brokerage firm failure, fraud, natural disaster, or theft.
Ethics A wide range of investment activities may be legal but carry substantial ethical baggage. The Chartered Financial Analyst (CFA) program promotes investment education and ethical behavior among those involved in the investment business. The program is administered by the Association for Investment Management and Research (AIMR).
Ethics To earn a CFA designation, candidates must pass three separate exams taken at least a year apart. Persons who have earned the CFA designation must subscribe to the AIMR standards of professional conduct.
Review The Role of the Capital Markets - Economic Function
- Continuous Pricing Function
- Fair Pricing Function
The Exchanges - National Exchanges
- Regional Exchanges
- Trading Systems
- The Specialist System
- SuperDOT and NYSE Direct+
- Marketmakers
- Circuit Breakers and Trading Curbs
Review The Nasdaq Stock Market - The Small Order Execution System (SOES)
- The Nasdaq National Market
- The Nasdaq Small Cap Market
The Over-the-Counter Market - Over-the-Counter Bulletin Board (OTCBB)
- Pink Sheet Stocks
- Third and Fourth Markets
Review Regulation - The Exchanges
- The SEC
- The NASD
- SIPC
Ethics - Illegal vs. Unethical
- The Chartered Financial Analyst Program
- History
- The CFA Program Exams
- AIMR Standards of Professional Conduct
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