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A
AAA
American Arbitration
Association
ADR
See American Depositary Receipt
Advanced Computerized Execution System
(ACES)
Customized facility offered by the
NASD that permits broker/dealers to automate their
internal execution and record-keeping functions.
advertising review
A regulatory
service provided by NASD Regulation to ensure that
advertising and sales literature used by members
conforms to NASDR and Securities and Exchange Commission
standards of fairness and accuracy.
affirmative obligations
Requirements
imposed on Nasdaq Market Makers by the NASD. These
include quoting firm prices, making two-sided markets on
a continuous basis, participating in the Small Order
Execution System, and reporting price and volume data
for each transaction in a Nasdaq security within 90
seconds of execution. (See Market Maker, Small Order
Execution System, two-sided market)
aftermarket
Trading activity in a
security immediately following its initial offering to
the public.
agency order
An order that a
broker/dealer executes for the account of a customer
with another professional or retail investor and for
which a commission is typically charged. (See principal
orders)
American Depositary Receipt (ADR)
A
U.S. security that is a repackaged foreign security. A
U.S. bank creates an ADR based on evidence of ownership
of a specified number of shares in the foreign security,
while the underlying shares are held in a depositary in
the issuing company's home country. U.S. investors may
buy shares in the foreign company in the form of an ADR.
The certificate, transfer, and settlement practices for
ADRs are identical to those for U.S. securities.
AMEX
American Stock Exchange.
Amivest Liquidity Ratio
The Amivest
Liquidity Ratio is one type of liquidity measurement
which represents the dollar value of trading associated
with a one percent change in share price. Amivest is the
"creator" of this liquidity measurement. (See liquidity
ratio)
analysts
See securities analyst
annual report (10 K)
Public
companies are required to file an annual report with the
Securities and Exchange Commission detailing the
preceding year's financial results and plans for the
upcoming year. Its regulatory version is called "Form 10
K." The report contains financial information concerning
a company's assets, liabilities, earnings, profits, and
other year-end statistics. The annual report is also the
most widely-read shareholder communication. (See
management's discussion and analysis)
answer
A respondent's written reply
to a claim. (See arbitration, claim)
APTC
See Association of Publicly
Traded Companies
arbitral immunity
Arbitrators are
protected from suits arising out of their quasijudicial
conduct in arbitration proceedings. (See arbitrator)
arbitrage
Arbitrage involves the
simultaneous purchase of a security in one market and
the sale of it or a derivative product in another market
to profit from price differentials between the two
markets. (See derivative)
arbitration
A method where conflict
between two or more parties is resolved by impartial
persons - arbitrators - who are knowledgeable in the
areas in controversy. (See mediation)
arbitration counsel or arbitration
administrator
The person at the sponsoring
organization who handles administrative matters in
arbitration proceedings. (See arbitration)
arbitrator
A private, disinterested
person chosen to decide disputes between parties. (See
arbitration)
Arbitrators Code of Ethics
A guide
for the conduct and ethical responsibilities of
arbitrators in commercial disputes.
ask price (offer price)
The price at
which a Market Maker is willing to sell a security. (See
Market Maker, best ask)
associated person
A person engaged
in the investment banking or securities business who is
directly or indirectly controlled by an NASD member,
whether or not this person is registered or exempt from
registration with NASD. Every sole proprietor, partner,
officer, director, or branch manager of any NASD member.
Association of Publicly Traded Companies (APTC,
formerly NAOTC)
This organization, which is
not connected with the NASD, provides publicly-traded
companies with a forum for addressing regulatory and
legislative issues that affect them.
auction market
Stock exchanges, like
the New York Stock Exchange and the American Stock
Exchange, are auction markets where buyers and sellers
meet through a specialist. (See dealer market, Market
Maker, specialist)
Automated Confirmation Transaction ServiceSM
(ACTSM)
NASD service that allows parties to
a telephone negotiation to speed the steps involved in
completing a transaction.
award
The written determination of
the arbitrator
B
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bear and bull markets
A bear market is
one in which prices are low or declining; a bull market
is one in which prices are high or rising. bear
market
See bear and bull markets
beneficial owner
A person who
benefits from ownership of a security or mutual fund.
Shares or title may be held by a bank or broker for
safety and convenience, or in "street name" to expedite
transactions, but the real owner is the beneficial
owner. (See street name)
best ask
The lowest quoted offer of
all competing Market Makers to sell a particular stock
at any given time. (See Market Maker)
best bid
The highest quoted bid of
all competing Market Makers to buy a particular stock at
any given time. (See Market Maker, bid price)
best-efforts underwriting
An
investment bank, acting as an agent, agrees to do its
best to sell an issue to the public, but does not make
an outright purchase of the securities. (See
underwriter)
best-execution requirement
The
obligation of Market Makers, broker/dealers, and others
to execute customer orders at the best price available
at the time the trade is entered. (See Market Maker)
beta
A statistical measure of a
stock's volatility compared with the overall market. A
beta of less than 1 indicates lower risk than the
market; a beta of more than 1 indicates higher risk than
the market. (See volatility)
bid price (buy price)
The quoted bid
at which a Market Maker is willing to buy a stock. (See
Market Maker, best bid)
bid/ask spread
The difference
between the price at which a Market Maker is willing to
buy a security (bid), and the price at which the firm is
willing to sell it (ask). The spread narrows or widens
according to the supply and demand for the security
being traded. (See inside quote, spread)
block trade
A purchase or sale of a
large quantity of stock, generally 10,000 shares or
more.
blue-sky laws
State laws that
require issuers of securities to register their
offerings with the state before they can be sold to its
residents. Most blue-sky laws include provisions
relating to fraudulent activities and the licensing of
people selling securities. Nasdaq National Market
securities, subject to higher qualifications standards,
are exempted from registration requirements under most
states' blue-sky laws as are those listed on exchanges.
Board of Directors
The controlling
bodies of NASD Regulation, Inc. and The Nasdaq Stock
Market, Inc.
Board of Governors
The controlling
body of the National Association of Securities Dealers,
Inc.
bond
A long-term promissory note in
which the issuer agrees to pay the owner the amount of
the face value on a future date and to pay interest at a
specified rate at regular intervals.
book manager or syndicate
manager
See syndicate manager
branch office
Any location
identified by any means to the public or customers as a
location at which an NASD member conducts investment
banking or securities business.
broker
An individual or firm who
acts as an intermediary between a buyer and seller,
usually charging a commission. (See dealer)
broker/dealer
NASD member firms that
act as securities dealers or brokers, or perform both
functions. (See broker, dealer)
bull market
See bear and bull
markets
buy price
See bid price
buy-side trader
An individual, such
as a pension or mutual fund portfolio manager, who
effects trades for an institutional investor. (See
sell-side trader)
by-laws
See NASD By-Laws
C
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CAES
See Computer Assisted Execution
System
call
Bonds: The right to redeem
outstanding bonds before their scheduled maturity.
Options: The right to buy a specific number of shares at
a specified price by a fixed date. (See put)
capital commitment
The financial
investment Market Makers carry in inventories of stocks
in which they make markets. (See Market Maker)
Central Computer Complex
The
facility in Trumbull, Connecticut, where The Nasdaq
Stock Market's mainframe computers are located. The
computer complex is linked to more than 3,400 Nasdaq
terminals in securities firms and financial
institutions. The system processes more than 1 million
transactions per day. Nasdaq is also the only stock
market in the world with a fully redundant disaster
recovery facility, located in Rockville, Maryland.
Central Registration Depository
(CRD)
A computerized system in which NASD
maintains the employment, qualification, and
disciplinary histories of more then 400,000 securities
industry professionals who deal with the public.
Chinese Wall
A term used to describe
procedures enforced within a securities firm that
separate the firm's departments to restrict access to
non-public, material information. The procedures help
NASD members avoid the illegal use "inside" information.
churning
See excessive trading
circuit breaker
A procedure that
temporarily halts trading on all U.S. stock markets for
one hour when the Dow Jones Industrial Average falls 250
points or more within a trading day. The pause is
designed to allow time for the markets to absorb the
news that precipitated the decline. Should the average
fall another 150 points within the same day, trading
would again be halted, this time for two hours.
claim
A demand for money or other
relief. (See arbitration)
clearance
The conclusion of an
exchange of securities. (See settlement)
co-manager
See co-underwriter
co-underwriter
Almost all public
offerings are co-managed by a "co-underwriter." (See
underwriter)
comfort letter
An accounting firm's
statement provided to a company preparing to go public.
The letter indicates the accountants' comfort that
unaudited financial data in the company's prospectus
consistently follow generally accepted accounting
principles, and no material changes have occurred since
the report was prepared. (See Generally Accepted
Accounting Principles, prospectus)
commission
Fees paid to a broker for
executing a trade based on the number of shares traded
or the dollar amount of the trade.
Committee on Uniform Security Identification
Procedures (CUSIP) number
A unique
nine-character alpha/numeric code appearing on the face
of each stock certificate that is assigned to a security
by Standard & Poor's Corporation. The number is used
to expedite clearance and settlement. (See clearance,
settlement, Standard & Poor's)
common stock
A class of securities
representing ownership and control in a corporation and
that may pay dividends as well as appreciate in value.
(See preferred stock)
compliance departments
Departments
set up in all organized stock markets to oversee market
activity and make sure that trading complies with
Securities and exchange Commission and other Exchange
regulation.
Composite Quotation Service
See
Consolidated Quotation System
Computer Assisted Execution System
(CAES)
Nasdaq service that automates order
routing and execution for securities listed on domestic
exchanges in the Intermarket Trading System (ITS). When
linked to ITS, Market Makers can execute trades in
exchange-listed securities through CAES with specialists
on an exchange floor. (See Intermarket Trading System,
Market Maker, specialist)
computer-to- computer interface
(CTCI)
High speed communication interface
between large member firms' mainframes and the Nasdaq
system for more efficient transfer of information.
confirmation
Formal memorandum from
a broker to a client giving details of securities
transaction. When a broker acts as a dealer, the
confirmation must disclose that fact to a customer.
Consolidated Quotation System
(CQS)
An electronic service that provides
quotations on issues listed on the New York and American
stock exchanges, regional stock exchanges, and issues
traded by NASD member firms in the third market. Nasdaq
processes this data and provides it to its subscribers
as the Composite Quotation Service. The initials may be
used either for the exchange system or Nasdaq service.
(See third market)
Consolidated Tape Association
(CTA)
Operating authority for
exchange-listed securities information.
convertible bond
A bond that can be
exchanged at the option of the holder into preferred or
common stock at a preset ratio. (See common stock,
preferred stock)
counterclaim
A claim against the
claimant in an arbitration. (See claim)
cooling-off period
The period after
a company's prospectus has been filed with the
Securities and Exchange Commission and before offering
is made to the public.
corporate financing review
A
regulatory service of NASD that ensures the underwriting
terms and conditions of public companies are fair and in
the interests of the issuing company and its investors.
corporate governance standards
The
non-quantitative qualification standards for companies
whose securities are traded on Nasdaq.
cost of capital
The rate that a
company must pay for its capital or the minimum return
that is required to maintain the market value of a
company's common stock. Cost of capital reflects the
market's perception of the risk associated with a
company's common stock.
CQS
See Consolidated Quotation
System
CRD
See Central Registration
Depository
credit and debit balance
A credit
balance represents monies owed to a customer by a
broker/dealer, generally resulting from the customer's
sale of securities. Debit balances are monies owed to a
broker/dealer by a customer, generally resulting from
the customer's purchase of securities.
credit balance
See credit and debit
balance
crossed quotations
See locked or
crossed quotations
CTA
See Consolidated Tape
Association
CTCI
See Computer-to-Computer
Interface
CUSIP number
See Committee on
Uniform Security Identification Procedures number
customer agreement
See new account
information form
customer protection
rule An SEC rule
that requires broker/dealers to establish separate
reserve accounts into which customer credit balances are
maintained. The rule prohibits a firm from using
customer balances to finance its own trading. The rule
also requires firms to gain possession of customers'
fully paid and excess margin securities promptly, and to
segregate them properly. (See prompt receipt and
delivery of securities)
D
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DBCC
See District Business Conduct
Committee
dealer
Any person or company in the
business of buying and selling securities for his or her
own account, through a broker or otherwise. (See broker)
dealer market
Nasdaq is a competing
dealer market, different from an auction market in that
many dealers, called Market Makers, use their own
capital, research, retail, and/or systems resources to
represent a stock. Many Market Makers can represent the
same stock; thus, they compete with each other to buy
and sell that stock. Auction markets have only one
person, a specialist, who in a centralized location or
"floor," matches incoming orders to buy and sell each
stock. Specialists are not allowed to provide research
or retail sales support, and are limited to only one
firm's available capital. The average Nasdaq stock has
eleven Market Making firms that risk and invest their
capital.
dealer spread
See house spread
debenture
An unsecured bond backed
solely by the general credit of a company.
debit balance
See credit and debit
balance
deleted
A security is no longer
included in The Nasdaq Stock Market.
depositary bank
When a company
decides to issue American Depositary Receipts, it
appoints an authorized depositary, normally part of a
large U.S. banking institution or trust company. (See
American Depositary Receipts)
depth of market
The number of shares
of a security that can be bought or sold at the bid and
ask prices near the market without causing a dramatic
change in price. (See liquidity ratio)
derivative
A generic term often
applied to a wide variety of financial instruments that
derive their cash flows, and therefore their value, by
reference to an underlying asset, reference rate, or
index.
Digital Interface Service Character Interface
Presentation Server (DIS/CHIPS)
An
alternative to Nasdaq Workstation II service for Nasdaq
Level 3 users, DIS/CHIPS connects the Nasdaq network
directly to a firm's computer system, allowing the firms
to customize functionality for its traders.
direct participation programs
(DPP)
Partnership agreements that provide a
flow-through of tax consequences to the participants.
DIS/CHIPS
See Digital Interface
Service/Character Interface Presentation Server
discretionary account
An account
empowering a broker or adviser to buy and sell without
the client's prior knowledge and consent.
distribution capability
An
investment banker or underwriter's ability to sell
shares.
District Business Conduct Committee
(DBCC)
The local enforcement arm of NASD.
DBCCs are composed of the securities industry members
who are elected to their positions by their fellow
professionals to enforce compliance with the NASD
By-Laws and Rules of Fair Practice, federal securities
laws, rules and regulations, the rules of the Municipal
Securities Rulemaking Board, and other applicable
securities regulations. Each of NASD's 11 Districts
elects a DBCC.
dividend
Distributions to
stockholders of cash or stock declared by the company's
board of directors.
dividend notification
A requirement
that companies notify the Uniform Practice Department of
The Nasdaq Stock Market at least 10 days in advance of
the record date of a stock dividend so that Nasdaq can
set the ex-dividend date. (See ex-dividend date)
downtick
A transaction executed at a
price lower than the preceding transaction in that
security, or a new quote registered at a lower price
than the preceding quote in that security. (See uptick)
DPP
See direct participation
programs
due diligence
A thorough
investigation of a company that is preparing to go
public, undertaken by the company's underwriter and
accounting firm.
E
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ECN
See electronic communication network
(ECN)
EDGAR
Electronic Data Gathering,
Analysis, and Retrieval (EDGAR)--An electronic system
developed by the Securities and Exchange Commission.
EDGAR permits companies to file electronically with the
SEC all documents required for securities offerings and
ongoing disclosure obligations. EDGAR became fully
operational mid-1995. (See Securities and Exchange
Commission)
electronic communication network
(ECN)
Any electronic system that widely
disseminates to third parties orders entered by an
exchange Market Maker or OTC Market Maker, and permits
such orders to be executed against in whole or in part.
(See Market Maker)
eligibility rules
The Code of
Arbitration states that no claim shall be eligible for
submission to arbitration where six years have elapsed
from the occurrence or event giving rise to the
controversy.
equity
The ownership interest of
stockholders in a company. Also, the excess of the
market value of securities over debit balances in a
margin account. (See credit and debit balance, margin)
excessive trading
A broker
excessively trades an account for the purpose of
increasing his or her commissions, rather than to
further the customer's investment goals.
ex-dividend date
The date on or
after which a security begins trading without the
dividend (cash or stock) included in the contract price.
(See dividend, dividend notification)
excess spread
policy The NASD
requirement that prohibits Market Makers from entering
quotations on The Nasdaq Stock Market that exceed
prescribed limits for maximum allowable spreads. (See
Market Maker, spread, two-sided market)
ex parte communication
Communication
by one party only with the arbitrator. (See arbitration)
executive sessions
A private
conference between the arbitrators during the course of
the hearing to determine matters that have arisen such
as evidentiary objections or motions.
F
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failure to execute
The failure of a
broker to execute an order of his or her customer.
FAQS
See Firm Access and Query
System
Federal Reserve System
A federal
government institution created by Congress to administer
the nation's credit and monetary policies. Among other
things, the Board of Governors of the Federal Reserve
System sets the initial amount of credit that
broker/dealers (as well as other lenders) may extend to
customers to purchase securities.
Federation Internationale des Bourses de
Valeurs
(FIBV)
Family of funds
A group of mutual
funds operated by the same investment management (mutual
fund) company.
Fannie Mae
1. A nickname for the
Federal National Mortgage Association (FNMA). A private,
shareholder-owned company that purchases mortgages from
lenders so those lenders will have more funds available
to loan to other potential homebuyers. It finances its
operations by issuing bonds or reselling loans in the
form of mortgage-backed securities. FNMA is often called
a "government-sponsored corporation" because it was
created and chartered by Congress and is still regulated
in a slightly different manner than other corporations.
2. A security issued by FNMA that is backed by insured
and conventional mortgages. Investment returns are based
on the interest and principal payments made by
homeowners on their mortgages.
Federal Deposit Insurance Corporation
(FDIC)
The federal agency that insures
deposits at a commercial bank to a limit of $100,000 per
depositor.
Federal funds
Reserve balances
maintained by Federal Reserve System member banks that
are above the required amount to back up deposits. Also
called fed funds.
Federal funds rate
The interest
rate on overnight loans of excess reserves made among
commercial banks. Set by the Federal Open Market
Committee (FOMC) of the Federal Reserve, this rate is an
important monetary policy indicator.
Federal Home Loan Mortgage Corporation
(FHLMC)
Also known as Freddie Mac. A
private, shareholder-owned company that was chartered by
Congress in 1970 to create a secondary market in
conventional mortgages, thus increasing the supply of
funds available to prospective homebuyers. The FHLMC
purchases mortgages from federally-insured financial
institutions and resells them in the form of
mortgage-backed securities, which it guarantees. FHLMC
is often called a "government-sponsored corporation"
because it was created by Congress and is regulated
differently than other corporations.
Federal National Mortgage Association
(FNMA)
Also known as Fannie Mae. A private,
shareholder-owned company that purchases mortgages from
lenders so those lenders will have more funds available
to loan to other potential homebuyers. It finances its
operations by issuing bonds or reselling loans in the
form of mortgage-backed securities. FNMA is often called
a "government-sponsored corporation" because it was
created and chartered by Congress and is still regulated
in a slightly different manner than other corporations.
See Fannie Mae.
Federal Open Market Committee
(FOMC)
A policy-making committee within the
Federal Reserve that is responsible for controlling
open-market operations. The FOMC regularly changes
interest rate policy as a way to influence the economy.
It is composed of the seven members of the Federal
Reserve Board and presidents from five of the 12 Federal
Reserve regional banks.
Federal Reserve Board
The seven
governing members of the Federal Reserve System. Board
members are appointed to 14-year terms. The chairman is
appointed to a four-year term.
Federal Reserve System
The
independent central bank of the United States. It
influences the supply of money and credit in the United
States through control of its banking reserves. It is
made up of 12 central banks in different regions and
serves as a regulatory arm for private U.S. banks. The
Fed, as it is known, is responsible primarily for
regulating the U.S. banking system and ensuring
stability of the banking system through its reserve
requirement policies.
Fiduciary
A person who has
discretionary authority or control over a qualified
retirement plan trust, its assets or its administration,
or who is paid to provide investment advice regarding
plan assets.
Financial analyst
Someone trained
in analyzing financial investments. Analysts investigate
the risk and return characteristics for a variety of
securities. Their reports are used by investors and
portfolio managers to make investment decisions. See
Chartered Financial Analyst (CFA).
Financial planner
Investment
professional who analyzes an investor's circumstances
and prepares a program to meet the investor's financial
objectives. See Certified Financial Planner (CFP).
Fixed annuity
Annuity that
guarantees fixed payments to the annuitant, either for
life or for a set period of time.
Fixed-income security
A security,
such as a bond or money market instrument, that pays a
specific interest rate.
Float
Often refers to the number of
shares of a security that are outstanding and available
for public trading.
Freddie Mac
1. A nickname for the
Federal Home Loan Mortgage Corporation (FHLMC) A
private, shareholder-owned company that was chartered by
Congress in 1970 to create a secondary market in
conventional mortgages, thus increasing the supply of
funds available to prospective homebuyers. The FHLMC
purchases mortgages from federally-insured financial
institutions and resells them in the form of
mortgage-backed securities, which it guarantees. FHLMC
is often called a "government-sponsored corporation"
because it was created by Congress and is regulated
differently than other corporations 2. A security issued
by the FHLMC that is secured by pools of conventional
home mortgages.
Full-coupon bond
A bond with an
interest rate and price close to those of comparable new
issues. Also current coupon.
Full-service broker
A broker who, in
addition to executing trades, offers investment advice,
asset management, financial planning and other services.
Fund of funds
A mutual fund that
invests in other mutual funds. These can offer more
diversification than a single fund, but also tend to
have a higher expense ratio because of the fees for the
underlying funds.
Fund switching
When an investor
sells shares in one mutual fund and reinvests the
proceeds in another mutual fund.
Futures contract
Contract to buy or
sell a security or commodity at a predetermined price at
some future date. The organization of the world's stock
markets, headquartered in Paris. FIBV encourages
cooperative policies designed to stimulate a free flow
of capital across national boundaries. The NASD became
an associate member of FIBV in 1992.
FIBV
See Federation Internationale
des Bourses de Valeurs
filing
Delivery to the Director of
Arbitration of the statement of claim or other
pleadings, to be kept on file as a matter of record and
reference.
financial printer
An experienced
financial printer that is familiar with Securities and
Exchange Commission regulations governing the graphic
presentation of a prospectus. (See prospectus, red
herring prospectus)
FIPSSM
See Fixed Income Pricing
SystemSM
Firm Access and Query System
(FAQS)
NASD system that allows participating
members computer access to their registration and
examination data maintained in the Central Registration
Depository. Members may use FAQS to schedule
qualification examinations, and review their CRD
accounting, balance and activity. (See Central
Registration Depository)
firm-commitment underwriting
See
underwriter
firm quotation
The NASD requirement
that a Market Maker execute an order from another
broker/dealer at its displayed Nasdaq price for the
normal unit of trading, or for its displayed size,
whichever is greater. (See Market Maker)
Fixed Income Pricing SystemSM
(FIPSSM)
A prototype system designed by the
NASD to centralize quotations and trade reporting for
high-yield and other debt securities.
foreign
A non-U.S. company with
securities trading on The Nasdaq Stock Market.
Form 10 K
See annual report
Form 20-F
A Securities and Exchange
Commission 1934 Act registration statement and annual
report form typically used by foreign issuers.
Form 6-K
The Securities and Exchange
Commission form for non-U.S. issuers to make periodic
reports.
Form F-1
The Securities and Exchange
Commission 1933 Act form registering the securities of a
non-U.S. company to be issued as part of a public
offering.
Form U-4
NASD uniform application
for security industry registration or transfer.
Form U-5
NASD uniform termination
notice for security industry registration.
forum fee
Fee charged by NASD (or
other forum) for the use of its facilities.
fourth market
The direct trading of
large blocks of securities between institutional
investors through a computer network. (See INSTINET,
third market)
fraud
See misrepresentation
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GAAP - Generally Accepted Accounting Principles
(GAAP)
Rules, conventions, standards, and
procedures that are widely accepted among financial
accountants. Since 1973, GAAP doctrine has been
established by the Financial Accounting Standards Board
(FASB), an independent, self-regulating organization.
General obligation bond (GO)
A
municipal bond in which interest and principal payments
are guaranteed by the full financial resources and
taxing power of the issuer.
Ginnie Mae
1. The nickname for the
Government National Mortgage Association (GNMA). A
government-owned corporation that acquires, packages,
and resells mortgages in the form of mortgage-backed
securities. 2. A mortgage bond, or mortgage-backed
security that is issued and guaranteed by GNMA and is
backed by the Federal Housing Administration (FHA),
Department of Veterans Affairs (VA) and Farmers Home
Administration (FHA). Mortgage bonds function like other
bonds.
Global fund
A mutual fund that
includes both domestic and foreign securities in its
portfolio. Compare to international fund.
Go long
Purchase a security for
investment, hoping that its price will rise.
Go short
Selling a borrowed
investment in the hopes that the price will fall. For
example, if you believe that the shares of a stock you
follow are headed lower, you may borrow some shares from
your broker, sell them, buy back the same number of
shares after the price has fallen, return the newly
purchased shares to the broker and pocket the
difference. You will have to pay your broker a fee for
the privilege of borrowing the security.
Government National Mortgage Association
(GNMA)
A government-owned corporation that
acquires, packages, and resells mortgages in the form of
mortgage-backed securities. Also called Ginnie Mae.
Governments
Slang term for
securities such as Treasury bills and bonds issued by
the U.S. government. Also called U.S. government
securities.
Graded vesting
A description for a
vesting schedule. With graded vesting, you own an
increasing portion of your matching contribution each
year you are with your company. In a four-year graded
plan, you own 25 percent of your employer's matching
contributions each year (25 percent x 4 years = 100
percent). For 2001, a graded vesting schedule cannot
exceed seven years. The limit will fall to six years on
Jan. 1, 2002.
Gross domestic product (GDP)
The
market value of all goods and services produced within a
country in a given period of time, and one of the most
important measures of a nation's economic health. GDP is
composed of four basic elements: consumption (spending
by households on goods and services), investment
(spending on capital equipment, inventories and
structures, including new housing), government purchases
(local, state and federal) and net exports (exports
minus imports). GDP is reported each quarter by the U.S.
Department of Commerce. GDP is a more widely used
measure than gross national product (GNP), which adds
goods and services produced by U.S. permanent residents
on foreign soil.
Gross earnings
Earnings before
taxes are withdrawn and deductions are calculated.
Gross national product (GNP)
Similar
to gross domestic product (GDP), but also includes the
value of goods and services produced outside a nation's
borders by its permanent residents. For example, if a
permanent resident of the United States owns a shoe
factory in Mexico, the profit from that factory is
computed in U.S. GNP, but not GDP.
Growth stock
The stock of a firm
that is expected to have above-average increases in
revenues and earnings. These firms normally retain most
of their earnings for reinvestment and therefore pay
small dividends. Growth stocks tend to have dividend
yields below that of the market average, valuation
levels above the market average and volatility above the
market average. A growth fund will tend to have a
greater amount of portfolio turnover (purchases and
sales).
Guaranteed investment contract
(GIC)
Contracts issued by an insurance
company or bank promising a fixed interest rate over a
specified period of time. GICs are low-risk investments
that generally offer low returns.
going-concern value
The value of a
company as an operating business to another company or
individual. (See goodwill)
goodwill
The going-concern value of
a company in excess of its asset value; goodwill is
considered an intangible asset. Generally, it is the
value of the business' good name, its customer
relations, high employee morale, and other factors that
might translate into earning power. Nasdaq's calculation
of net tangible asset value excludes goodwill. (See
going-concern value)
Government securities broker
Any
person or company regularly engaged in the business of
effecting transactions in government securities for the
account of others. The definition does not include
corporations that issue securities exempted by the
Secretary of the Treasury, corporations that are
empowered by law to issue exempt securities, banks or
other insured financial institutions.
green shoe
A provision in an
underwriting agreement that if there is an exceptional
public demand, an issuer will authorize additional
shares for distribution by the syndicate. (See issuer,
syndicate, underwriter)
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held
A situation where a security
is temporarily not available for trading. Market Makers
are not allowed to display quotes of held securities.
house
A person or company doing
business as a broker or dealer in securities, investment
banking, or related services.
house spread
Among Market Maker
firms, the house spread is the difference between the
highest price bid for a security, and the highest price
asked the difference between best bid and best ask. (See
best ask, best bid, inside market, inside quote)
hypothecation
Pledging of securities
or other assets as collateral to secure a loan, such as
a debit balance in a margin account. (See debit balance,
margin)
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ICI
See Investment Company Institute
ICSD
See International Councils of
Securities Dealers
IMAB
See International Markets
Advisory Board
individual investor
A person who
buys or sells securities for his or her own account. The
individual investor is also called a retail investor or
retail shareholder.
INSTINET
See The Institutional
Networks Corporation
IOSCO
See International Organization
of Securities Commissions
initial public offering (IPO)
A
company's first sale of stock to the public. Companies
making an IPO are seeking outside equity capital and a
public market for their stock. (See syndicate,
underwriter)
Industry Support Information Services
(ISIS)
The ISIS system supports all NASD
regulatory activities set forth in its charter and the
Securities Exchange Act of 1934. The system includes
information applications for securities industry
personnel and issuer companies, including databases on
registered personnel, issues, members, and market data
users.
inside market
The highest bid and
the lowest ask (offer) prices among all Market Makers
competing in a Nasdaq security; the best bid and ask
prices for a security. (See best bid, best ask)
inside quote
See inside spread
inside spread
(inside quote) The
difference between the best bid and best ask among all
securities is the highest bid and lowest offer being
quoted among all of the Market Makers competing in a
security. Since the spread is the aggregate of
individual Market Maker spreads, it is narrower than an
individual dealer spread or quote. (See Market Maker,
Market Maker spread)
institutional investor
A bank,
mutual fund, pension fund, or other corporate entity
that trades securities in large volumes. (See also
buy-side trader, fourth market, qualified institutional
investor)
Institutional Networks Corporation
(INSTINET)
A computerized service that
allows subscribers to display tentative bid and ask
quotes. INSTINET registered as a stock exchange with the
Securities and Exchange Commission; it supports the
"fourth market." (See fourth market, SelectNet)
Intermarket Surveillance Group
(ISG)
A group that coordinates surveillance
and investigations among NASD and other U.S. and foreign
exchanges trading in securities, options, and futures
and foreign securities. (See market surveillance)
Intermarket Trading System (ITS)
A
computer system that interconnects competing exchange
markets for the purpose of choosing the best market. ITS
is operated by Securities Industry Automation
Corporation (SIAC). (See Computer Assisted Execution
System)
International Councils of Securities Dealers
(ICSD)
An international organization of
self-regulatory and securities-industry organizations.
ICSD seeks to foster mutual understanding among members,
and to promote stable and efficient securities markets.
International Markets Advisory Board
(IMAB)
A board of chief executives of
institutional investors around the world. IMAB informs
and advises NASD about developments in major
international markets.
International Organization of Securities
Commissions (IOSCO)
IOSCO attempts to
harmonize international securities regulation, and
supports the development of securities markets around
the world.
international linkages
Intermarket
connections of world securities markets.
Investment Company Institute
(ICI)
The U.S. trade association for the
mutual fund industry. Investment companies create and
maintain mutual funds and investment trusts.
investment banking, securities
business
The business carried on by a broker
or dealer; a business that deals in government or
municipal securities; a business that underwrites or
distributes securities issues; a business that buys or
sells securities for itself or on the account of others.
The definition does not include banks or bank
departments. (See underwriter)
investor
A person who buys or sells
securities for his or her own account or the account of
others. (See individual investor, institutional
investor)
IPO
See initial public offering
ISG
See Intermarket Surveillance
Group
ISIS
See Industry Support
Information Services
issuer
A corporation that has
distributed to the public securities registered with the
Securities and Exchange Commission.
ITS
See Intermarket Trading System
ITS/CAES
See Intermarket Trading
System/Computer Assisted Execution System
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Junior security
A security with a lower
claim to assets or income than a senior security.
Important in determining who gets what in a bankruptcy,
liquidation or sale of assets.
Junk bond
Debt issued by a company
whose credit rating is below investment grade (below BBB
by Standard and Poor's or Baa by Moody's). Junk bonds
carry a much greater risk of default than
investment-grade bonds, but also offer greater potential
returns. Also known as high-yield bonds
Justified price
Fair market price
for a security, commodity, piece of real estate or other
asset based on all available knowledge about the asset.
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Keogh plan
A federally approved,
defined-contribution retirement program that permits
small-business owners and self-employed workers to set
aside savings on a tax-deferred basis. Keogh plans have
higher savings limits and more administrative
requirements than other plans commonly available to
these folks.
Key industry
Industry that is
central to a nation's economic health.
Know your customer
An ethical
guideline stating that brokers must know basic
information about a customer before opening an account
for him, in order to know which investments would be
appropriate for the customer.
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last-sale service
A service that allow
real-time access to last-sale information reported by
Market Makers. (See last-sale reporting)
last-sale reporting
The electronic
notification by a Market Maker to The Nasdaq Stock
Market of the price and the number of shares involved in
a transaction in a Nasdaq security. The notification
must be made within 90 seconds of the execution of an
order.
letter of intent
A letter that
formalizes the relationship between an underwriter and a
company preparing to go public. The letter of intent
outlines the underwriter fees, ranges for stock prices,
and other terms of the underwriter's agreement. (See
underwriter)
Level 1 Service
A vendor-distributed
service consisting of real-time inside bid/ask
quotations for securities quoted in the Nasdaq system
and comparable information for securities quoted in the
OTC Bulletin Board Service. (See OTC Bulletin Board
Service)
Level 2 Service
A component of
Nasdaq Workstation II service consisting of real- time
access to the quotations of individual Market Makers
registered in every Nasdaq-listed security as well as
Market Makers' quotations in OTC Bulletin Board
securities.
Level 3 Service
Consists of Level 2
Service plus the ability to enter quotations,
direct/execute orders, and send information; this
service is restricted to NASD member firms that function
as registered Market Makers in either Nasdaq,
exchange-listed, or OTC Bulletin Board securities.
limit order
An order to buy or sell
a security at a customer-specified price; a customer
order to buy or sell a specified number of shares of a
security at a specific price. (See stop-loss order)
limit-order file
A file maintained
as a feature of Nasdaq's Small Order Execution System
that stores customers' unexecuted limit orders. (See
limit order)
liquidity
The liquidity of a stock
is the ease with which the market can absorb volume
buying or selling, without dramatic fluctuation in
price.
liquidity ratio
A measure of the
trading volume of a security associated with a 1 percent
change in its price. The higher the ratio, the more
shares that can be traded with little change in price.
(See Amivest Liquidity Ratio)
listing and maintenance agreement
A
written contract between a securities market and an
issuing company. In it, the issuing company agrees to
meet and maintain the market's qualitative and
quantitative listing standards.
locked or crossed quotations
A
temporary and unusual condition where the ask (offer)
price of one Market Maker for a security is the same or
lower than the bid (buy) price of another Market Maker.
Locked or crossed quotations may occur in fast-moving
markets. (See ask price, bid price, Market Maker)
locked-in trade
A securities
transaction in which all of the terms and conditions of
the trade are accepted by the buyer and seller. Once a
transaction is locked in, last-sale reporting to Nasdaq
and reporting to the clearing corporation are processed
electronically. (See last-sale reporting)
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Maloney Act
Also called the Maloney
Amendment, provides for the regulation of
over-the-counter securities markets through national
associations registered with the Securities and Exchange
Commission. The act was passed in 1938 to add Section
15A to the Securities Exchange Act of 1934. The National
Association of Securities Dealers, Inc., is the only
association ever to register under the act.
MBARSSM
See Municipal Bond
Acceptance and Reconciliation Service
manager
See syndicate manager
management's discussion and analysis
(MD&A)
An interpretive section of a
prospectus and annual report, also called the Financial
Review.
managing underwriter
See syndicate
manager
margin
An account in which a
customer purchases securities on credit extended by a
broker/dealer. Rules of the Federal Reserve Board and
NASD govern margin accounts. (See Regulation T)
markdown and markup
A markdown is a
charge subtracted from the selling price of a security
that a customer is selling to a dealer/ broker for the
broker's/dealer own account. The broker/dealer adds a
markup to the price when it sells a security to a
customer from its own account. The markdown or markup
are the equivalent of a commission on the sale.
market capitalization
The price of a
stock multiplied by the total number of shares
outstanding. Also, the market's total valuation of a
public company.
market depth
See depth of market
Market Information Data Access System
(MIDAS)
Computer system that supports NASD
Regulation's market regulation and examination programs
by providing historical data on Nasdaq over-the-counter
quotation and trading volume.
Market Maker
A firm that maintains a
firm bid and offer price in a given security by standing
ready to buy or sell at publicly-quoted prices. The
Nasdaq Stock Market is a decentralized network of
competitive Market Makers. Market Makers process orders
for their own customers, and for other NASD
broker/dealers; all NASD securities are traded through
Market Maker firms. Market Makers also will buy
securities from issuers for resale to customers or other
broker/dealers. About 10 percent of NASD firms are
Market Makers; a broker/dealer may become a Market Maker
if the firm meets capitalization standards set down by
NASD.
Market Maker spread
The difference
between the price at which a Market Maker is willing to
buy a security and the price at which the firm is
willing to sell it. (See inside market)
market order
An order to buy or sell
a stated amount of a security at the best possible price
at the time the order is received in the marketplace.
Market Regulation
See NASD
Regulation, Inc.
market surveillance
A highly
automated, centralized process of investigating and
preventing abusive, manipulative, or illegal trading
practices in The Nasdaq Stock Market. The Market
Surveillance Department is called Market Regulation.
(See NASD Regulation, Inc.)
market value
The market value of a
security is the last-sale price multiplied by total
shares outstanding. It is calculated throughout the
trading day, and is related to the total value of the
index. (See last-sale reporting)
material news
News released by a
public company that might reasonably be expected to
affect the value of a company's securities or influence
investors' decisions. Material news includes information
regarding corporate events of an unusual and
non-recurring nature, news of tender offers, unusually
good or bad earnings reports, and a stock split or stock
dividend. (See trading halt)
MD&A
See management's discussion
and analysis
mediation
An informal, voluntary
process used in securities industry disputes in which a
mediator helps negotiate a mutually-acceptable
resolution between disputing parties. Unlike arbitration
or litigation, mediation does not impose a solution. If
the parties cannot negotiate an acceptable settlement,
they may still arbitrate or litigate their dispute. (See
arbitration)
member firm
A broker/dealer that is
a member of the National Association of Securities
Dealers, Inc.
MIDAS
See Market Information Data
Access System
misrepresentation
A false
representation of a matter of fact that should have been
disclosed, which deceives another so that he/she acts
upon it to his/her injury.
most active
Most active Nasdaq
National Market stocks.
motion
An application made to the
arbitrator(s) for the purpose of obtaining a rule or
order directing some act to be done in favor of the
applicant.
multiple
See price/earnings ratio
Municipal Bond Acceptance and Reconciliation
Service (MBARSSM)
Service designed to
eliminate submission of trade-data paperwork to the
clearing corporation and to assist in the comparison and
clearing of municipal bond, over-the-counter corporate
bond, and unit investment trust trades.
Municipal bonds
Bonds issued by
states, cities, counties, and towns to fund public
capital projects like roads, schools, sanitation
facilities, bridges, as well as operating budgets. These
bonds are exempt from federal taxation and from state
and local taxes for the investors who reside in the
state where the bond is issued.
Municipal securities dealer
Any
person, except a bank or department or division of a
bank, engaged in the business of buying and selling
municipal securities for his own account. Banks are not
included in this definition.
Municipal securities broker
A broker
engaged in the business of effecting transactions in
municipal securities for the account of others. Banks
are not included in this definition.
Municipal securities
See Municipal
bonds
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NASAA
See North American Securities
Administrators Association, Inc.
NASD
See National Association of
Securities Dealers, Inc.
NASD Information Request Form
(NIRF)
Allows members of the public to
obtain certain types of disciplinary and registration
information regarding member firms and associated
persons.
NASD Rules
The numbered rules set
forth in the NASD Manual beginning with the Rule 0100
Series.
NASDRSM
See NASD Regulation, Inc.
NASD By-Laws (Marketplace Rules)
The
basic rules and regulations that govern the National
Association of Securities Dealers, Inc. Attached to the
By-Laws are Schedules: Schedule A - NASD assessments and
fees Schedule B - NASD district boundaries.
NASD Regulation, Inc. (NASDRSM)
An
independent subsidiary of the NASD that regulates the
activities of broker/dealers in the over-the-counter
industry and The Nasdaq Stock Market. NASDR carries out
its regulatory responsibilities through education,
examinations, market surveillance, registration of
securities personnel, advertising and underwriting
reviews, disciplinary actions that violate rules,
investigation of customer complaints, and forums to
resolve disputes. NASDR also regulates the sale of
mutual funds, direct participation programs, and
variable annuities.
NAqcessSM
A proposed service of The
Nasdaq Stock Market that provides investors with
market-wide price protection of their limit orders, the
opportunity to obtain price improvement in buying and
selling Nasdaq stocks, and increased access to Nasdaq.
Nasdaq Primary Retail Order View and Execution System
(N*Prove) is a similar system that NASD approved, but
was rejected by the Securities and Exchange System. (See
limit order, Small Order Execution System)
Nasdaq
The National Association of
Securities Dealers Automated Quotation system. (See
National Association of Securities Dealers, Inc.)
Nasdaq CompositeSM Index
A
statistical measure that indicates changes in The Nasdaq
Stock Market. The Nasdaq Composite Index measures all
Nasdaq domestic and foreign common stocks. It is
market-value weighted: each company's security affects
the index in proportion to its market value. Securities
in the Nasdaq Composite Index generally are assigned to
subindexes based on their Standard Industrial
Classification (SIC) codes. (See market value, subindex,
Standard Industrial Classification codes)
Nasdaq Director
The Nasdaq employee
who serves as the primary point of contact and liaison
between a public company and The Nasdaq Stock Market.
Nasdaq InternationalSM, Ltd.
A
subsidiary of Nasdaq headquartered in London, England.
Nasdaq International supports NASD members in London,
serves as a liaison to United Kingdom and European
companies seeking to list securities on Nasdaq,
encourages foreign institutional participation in Nasdaq
stocks, and promotes the international image of the NASD
and its markets.
Nasdaq International Service
The
extension of The Nasdaq Stock Market to the United
Kingdom. The service supports a European trading session
from 3:30 a.m. to 9 a.m. eastern time (U.S.). This
enables participants to monitor trade during London
market hours. NASD members are eligible to participate
in this session through their U.S. trading facilities or
approved United Kingdom affiliates.
Nasdaq National Market®
More than
3,900 companies that are the larger and generally more
actively-traded Nasdaq securities. (See The Nasdaq
SmallCap Market)
Nasdaq Quotation Dissemination ServiceSM
(NQDS)
The NQDS carries real-time quotation
information for Market Makers and electronic
communication networks (ECNs) in each Nasdaq National
Market® and Nasdaq SmallCap MarketSM issue. Using the
NQDS data feed, market data vendors are able to create a
Level 2 display similar to the Nasdaq Workstation IITM
to show the depth of Market Makers at each price level
of a Nasdaq-listed security. (See electronic
communication network (ECN), Market Maker, Nasdaq
Workstation IITM)
Nasdaq Trade
Dissemination ServiceSM (NTDS)
The NTDS
carries real-time trade price and volume data to market
data vendors and other data feed recipients. NTDS
carries the price and size for all trade reports that
are submitted to the Automated Confirmation Transaction
ServiceSM (ACTSM). For pricing purposes, the Nasdaq Last
Sale information is bundled with Nasdaq Level 1 Service.
(See Automated Confirmation Transaction ServiceSM
(ACTSM))
Nasdaq Workstation IITM
A
computerized trading tool that provides access to all
Nasdaq markets for Market Makers, brokers, and
institutions. (Formerly named Service Delivery Platform)
National Association of Securities Dealers, Inc.
(NASD®)
The largest self-regulatory
organization for the securities industry in the United
States. NASD is responsible for the operation and
regulation of Nasdaq and the over-the-counter securities
markets; it is the parent company of NASD Regulation,
Inc., and The Nasdaq Stock Market, Inc. (See Nasdaq, The
Nasdaq Stock Market, NASD Regulation, Inc.)
National Adjudicatory Council
(NAC)
The National Adjudicatory Council is a
committee of NASD Regulation, composed of
representatives of member firms and the public, that is
authorized to review disciplinary, membership, and
exemptive proceedings, as well as applications for
relief from statutory disqualifications.
National Securities Clearing Corporation
(NSCC)
A securities clearing corporation
formed in 1977 by the merger of the National Clearing
Corporation, owned by the NASD, and the clearing
facilities of the New York Stock Exchange (NYSE) and the
American Stock Exchange (AMEX). It is a medium through
which trades in the respective participants' markets are
cleared and settled. (See clearance, settlement)
net change
The difference between
today's last trade and the previous day's last trade.
net capital rule
The Security and
Exchange Commission requires that all broker/dealers
maintain no more than a 15 to 1 ratio between
indebtedness and liquid assets. Indebtedness includes
money owed to the firm, margin loans, and commitments to
purchase securities. Liquid assets include cash, and
assets that are easily converted to cash.
net tangible assets
An accounting
term defined as stockholders' equity minus goodwill.
(See equity, goodwill)
neutral
One or more individuals
assigned to mediate through negotiations or arbitrate by
adjudication claims between or among disputing parties.
(See arbitration, mediation)
new account
information form
Document filled out by a broker that details vital facts
about a new client's financial circumstances and
investment objectives.
new issue
Securities being offered
to the public for the first time; subject to the rules
of the Securities and Exchange Commission. (See initial
public offering, underwriter)
newspaper listings
The stock price
coverage given to securities in newspapers, dependent
upon in which market the company trades, the size of the
company, and the level of trading activity in the
company's stock.
NIRF
See NASD Information Request
Form
no quote (NQ)
No Market Makers
making an inside market at this time. (See inside
market)
North American Securities Administrators
Association, Inc. (NASAA)
An association of
securities commissioners from each of the 50 states, the
District of Columbia, Puerto Rico, and several of the
Canadian provinces.
NQ
See no quote
NQDS
See Nasdaq Quotation
Dissemination ServiceSM
NSCC
See National Securities
Clearing Corporation
NTDS
See Nasdaq Trade Dissemination
ServiceSM
NYSE
New York Stock Exchange
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OCC
See Options Clearing Corporation
offer price
See ask or offer price
Office of Supervisory Jurisdiction
(OSJ)
Any main or branch office of an NASD
member where one or more of the following take place:
order execution or market making; public offerings or
private placements are structured; customers' funds or
securities are held; new accounts are approved; customer
orders are reviewed and endorsed; advertising or sales
literature for use by the member's associated persons is
approved; the activities of associated persons at other
branch offices of the member are supervised.
open order
An order to buy or sell a
security that remains in effect until it is either
canceled by the customer or executed.
operations
The back office of a
brokerage firm where all clerical functions having to do
with clearance, settlement, and execution of trades are
handled. (See clearance, prompt receipt and delivery of
securities, settlement)
OPRA
See Options Prices Reporting
Authority
option
An instrument that gives the
owner the right to buy or sell a specified number of
shares of a specified stock at a specified price within
a specified period of time. A call option allows the
buyer to purchase the underlying stock at any time up to
the expiration date of the contract. A put option allows
the buyer to sell the underlying stock at any time up to
the expiration date of the contract.
Options Clearing Corporation
(OCC)
The issuer of standardized options
traded on exchanges. OCC is owned by the options
markets.
Options Prices Reporting Authority
(OPRA)
A joint industry plan that
disseminates inside quotations and last sale data for
options.
order flow
aggregated small orders
to purchase or sell securities that brokers send to
dealers often in return for cash payments.
order matching
The Market Maker
practice of pairing buy and sell orders for like amounts
of securities at identical prices. (See Market Maker,
Small Order Execution System)
order ticket
A form completed by a
registered representative of a brokerage firm upon
receiving order instructions from a customer.
OSJ
See Office of Supervisory
Jurisdiction
OTC
See over-the-counter securities
OTCBB
See OTC Bulletin Board Service
OTC Bulletin Board® Service
The OTC
Bulletin Board® (OTCBB) is a regulated quotation service
that displays real-time quotes, last-sale prices, and
volume information in over-the-counter (OTC) equity
securities. An OTC equity security generally is any
equity that is not listed or traded on Nasdaq® or a
national securities exchange. OTCBB securities include
national, regional, and foreign equity issues, warrants,
units, American Depositary Receipts (ADRs), and Direct
Participation Programs (DPPs). The OTCBB is a quotation
medium for subscribing members, not an issuer listing
service, and should not be confused with The Nasdaq
Stock MarketSM. OTCBB securities are traded by a
community of Market Makers that enter quotes and trade
reports through a highly sophisticated, closed computer
network, which is accessed through Nasdaq Workstation
IITM. (See American Depositary Receipt, Nasdaq
Workstation IITM, (The) Nasdaq Stock MarketSM)
out-of-pocket loss
The difference
between the value of what the purchaser parted with, and
the value of what he or she has received.
over-the-counter (OTC)
securities
Securities that are not listed
and traded on an organ
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p/e ratio
See price/earnings ratio
passive market-making
A process that
allows a Market Maker firm to be both underwriter and
buyer of a company's securities in a secondary public
offering. A underwriting Market Maker may bid for the
security during the issue's cooling-off period if its
bid is no higher than a competing, non-underwriting,
Market Maker's. Before the Securities and Exchange
Commission adopted passive market-making in 1993, Market
Makers were required to withdraw from solicitation and
market-making activities during the cooling-off period.
(See Market Maker, secondary offering, underwriter,
cooling-off period)
penalty bid
A syndicate manager's or
underwriter's offer to buy a security at specific price
during a new issue distribution. The bid acts to
stabilize the price of the stock, to facilitate
distribution. The bid, also called "pegging," is
permitted under Securities and Exchange Commission Rule
10b-7; otherwise the practice is prohibited. (See bid,
new issue, syndicate manager, underwriter)
pink sheets
Daily printed listings
containing quotations for thousands of over-the-counter
stocks that are not listed on any of the major stock
markets. These quotations are entered by dealers acting
as Market Makers in the individual securities. The pink
sheets are printed by the National Quotation Bureau.
portfolio
The combined holding of
more than one stock, bond, commodity, real estate
investment, or other asset by an individual or
institutional investor.
PORTAL
The NASD's trading system for
secondary trading of unregistered securities in
transactions exempt from the registration and a
prospectus delivery requirement of the Securities Act of
1933 pursuant to SEC Rule 144A.
pre-syndicate bid |
