Market Structure and Trading Flashcards

Which regulatory body oversees the operations of US stock exchanges and broker-dealers?

Answer: SEC (Securities and Exchange Commission)

The SEC is the primary federal regulator of US securities markets, overseeing exchanges, broker-dealers, and investment advisers.

Rule 144 governs the sale of:

Answer: Restricted and control securities

SEC Rule 144 establishes the conditions under which restricted and control securities can be publicly resold without registration.

What is the purpose of a prospectus?

Answer: To disclose material information about a securities offering to potential investors

A prospectus is a legal disclosure document providing investors with essential information about a securities offering before they invest.

Insider trading refers to buying or selling securities based on:

Answer: Material nonpublic information in breach of a duty

Insider trading is illegal trading based on material, nonpublic information that gives an unfair advantage over other investors.

The Securities Act of 1933 primarily regulates:

Answer: The issuance of new securities in the primary market

The Securities Act of 1933 focuses on new securities offerings, requiring registration and disclosure of material information.

What is a 'pink sheet' stock?

Answer: An OTC security not listed on a formal exchange, typically with less regulatory oversight

Pink sheet stocks trade over-the-counter outside major exchanges with minimal reporting requirements and less regulatory scrutiny.