Capital markets
- SEC oversees markets; FINRA regulates broker-dealers; MSRB writes muni rules
- Primary market = new issues; secondary = trading between investors
- Fed tools: open market operations, discount rate, reserve requirements
Products and risks
- Common stock = voting; preferred = fixed dividend priority
- Bond prices fall when rates rise; GO munis backed by taxing power
- Call buyer max loss = premium; uncovered call writer = unlimited risk
Trading and accounts
- Market, limit and stop orders; regular-way settlement T+1
- Reg T initial margin 50%; JTWROS has survivorship
- Churning, front running, insider trading and selling away are prohibited
Regulatory framework
- Form U4 to register; Form U5 on termination
- SARs for suspicious activity; CTRs for cash over $10,000
- Outside business activities need prior written notice to the firm
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