Wiley Series 55 Exam Review 2015 + Test Bank The Equity Trader Qualification Examination

ABOUT THE SERIES 55 EXAM XI

ABOUT THIS BOOK XV

ABOUT THE TEST BANK XVII

ABOUT THE SECURITIES INSTITUTE OF AMERICA XIX

CHAPTER 1 ISSUING CORPORATE SECURITIES 1

The Prospectus 2

The Final Prospectus 3

Prospectus to Be Provided to Aftermarket Purchasers 4

SEC Disclaimer 4

Misrepresentations 4

Tombstone Ads 5

Free Riding and Withholding/FINRA Rule 5130 5

Underwriting Corporate Securities 7

Types of Underwriting Commitments 7

Market Out Clause 7

Types of Off erings 8

Awarding the Issue 9

The Underwriting Syndicate 9

Exempt Securities 9

Exempt Transactions 10

Private Investment in a Public Equity (PIPE) 13

Reverse Merger 14

Rule 137 Nonparticipants 15

Rule 138 Nonequivalent Securities 16

Rule 139 Issuing Research Reports 16

Rule 415 Shelf Registration 17

Securities Off ering Reform Rules 17

SEC Rule 405 18

Additional Communication Rules 19

Pretest 21

CHAPTER 2 THE SECURITIES MARKETPLACE 25

Types of Orders 25

Volume Weighted Average price (VWAP) Orders 28

The Exchanges 29

The Role of The Specialist/Designated Market Maker (DMM) 30

Short Sales 34

Reading the Consolidated Tape 39

Pretest 41

CHAPTER 3 TRADING OVER THE COUNTER AND NASDAQ SECURITIES 43

Market Makers 43

Nasdaq Subscription Levels 44

Registering as a Market Maker 45

Registering as a Market Maker in an OTC BB Security 45

Piggybacking a Quote 47

Nasdaq Quotes 48

Locked and Crossed Markets 49

Nominal Nasdaq Quotes 49

Payments for Market Making 49

Nasdaq Execution Systems 50

Order Entry Parameters 53

The Order Routing Process 54

Pegged Orders 55

The Alternative Display Facility (ADF) 55

Trade Reporting and Comparison Service (TRACS) 56

Advanced Computerized Execution System (ACES) 56

Electronic Communication Networks (ECNs) 57

Unlisted Trading Privileges 58

Market Centers 58

NonNasdaq OTC BB 61

Pink Sheets 62

Third Market 62

Nasdaq Market Center For Listed Securities 63

Fourth Market 63

Pretest 65

CHAPTER 4 MARKET MAKER RESPONSIBILITIES AND TRADE REPORTING 69

Times for Entering a Quote 69

Withdrawing Quotes 72

Handling and Displaying Customer Limit Orders 73

Interpositioning 77

Automated Confi rmation System (ACT) Market Center Trade Reporting Facility 77

Nasdaq Trade Reporting Facility (TRF) 83

Step Out Trades 83

Trading Halts 84

Market Making During Syndication 85

Syndicate Short Positions 90

Pricing of IPOs 90

Trade Reporting and Compliance Engine (TRACE) 91

Pretest 95

CHAPTER 5 COMMISSIONS AND TRADE COMPLAINTS 99

Broker vs. Dealer 99

FINRA 5% Markup Policy 100

Markups/Markdowns When Acting as a Principal 101

Riskless Principal Transactions 102

Proceeds Transactions 102

Dominated and Controlled Markets 102

Net Transactions with Customers 103

Protection of Customer Orders 104

Firm Quote Rule 104

Trade Complaints between Members 106

The Order Audit Trail System (OATS) 106

Electronic Blue Sheets 107

Pretest 109

CHAPTER 6 SECURITIES INDUSTRY RULES AND REGULATIONS 111

The Securities Exchange Act of 1934 111

The Securities Exchange Commission (SEC) 112

Trading Suspensions 113

Issuers Repurchasing Their Own Securities 113

Tender Off ers 114

Large Trader Reporting 116

Risk Management Controls 116

The Insider Trading and Securities Fraud Enforcement Act of 1988 117

Firewall 118

Nasdaq Listing Standards 118

The Penny Stock Cold Call Rule 119

Fair Dealings with Clients 120

The Uniform Practice Code 124

Prime Brokerage Accounts 128

Investment Advisors Act of 1940 130

Brochure Delivery 130

Wrap Accounts 130

Securities Investor Protection Corporation Act of 1970 131

Pretest 133

ANSWER KEYS 137

GLOSSARY OF EXAM TERMS 141

INDEX 207