6.1) What are the Pink Sheets?
Named for the color of the paper originally used for the daily listings
of bid and ask prices for over-the-counter stocks along with a list of
brokerages making a market. In generaly usage this is most particularly
referring to those where a price is not listed elsewhere.
In 1999 these unlisted quotations became available via the EQS or
Electronic Quotation Service, an Internet-based, real-time quotation
service for OTC equities and bonds for market makers and brokers.
6.2) What are the Yellow Sheets?
Similar to the pink sheets, except the prices listed are for taxable corporate
bonds and other debt. A daily bulletin from the National Quotation Bureau
which provides updated bid and ask prices for over-the-counter corporate bonds
along with a list of brokerages which make a market in those bonds.
6.3) What are Blue Sheets?
Named for the color of the paper originally used to provide the SEC
with detailed information about trades performed by a firm and its clients.
The information includes the security’s name, the date traded, price,
transaction size, and a list of the parties involved.
6.4) What is the Beige Book?
Each Federal Reserve Bank gathers anecdotal information on current economic
conditions in its District through reports from Bank and Branch directors and
interviews with key business contacts, economists, market experts, and other
sources. The Beige Book summarizes this information by District and sector.
An overall summary of the twelve district reports is prepared by a
designated Federal Reserve Bank on a rotating basis, published eight
times per year.
6.5) What is a Green Shoe?
A “green shoe” is the underwriter’s option to buy additional shares (usually 15%)
at the offering price from the company selling new shares. During the 1920’s a
new share offering by The Green Shoe Company was the first time underwriters
received an option to buy more shares at the offering price.
6.6) What is Breaking Syndicate?
The ending of the syndicate of investment bankers (underwriters) involved
in the distribution of a new issue of securities (IPO).
Upon the breaking of the syndicate, the individual members are free to
trade the securities in the secondary market without price restrictions.
If the secondary market sees a price drop and the underwriters are unable
or unwilling to support the price (purchase back shares as principal or as
agent) this is called “Breaking Syndicate.”
6.7) What is a White Shoe?
It is slang for broker-dealers who are strongly against hostile takeover practices.
Also a “white shoe” is a person employed in corporate finance. At the turn
of the 19th century those in corporate finance were among the hoity-toity
of society who were able to wear white shoes since they never did
anything that would get them dirty.
Similarly it refers to the hoity-toity who wore the white buck shoe
as a fashion requirement within elite social organizations in the
1950s. Even the haughty Consuls of Ancient Rome wore white shoes.
6.8) Who are the Hoity-Toity?
Pronounced “hoy tea toy tea” is a term used by Hoi Polloi with distain
to refer to haughty pretentious people or pejoratively of the bourgeoisie.
6.9) Who are (the) Hoi Polloi?
Pronounced “hoi-puh-LOI” (also sometimes misspelled as Hoi Poli)
are the common people, très vulgar, the plebians (Ancient Rome),
the proletariat (K. Marx), the proles (G. Orwell), déclassé & déclassée,
the peons and scrubs, the homies, basically all us schmucks not born
with the silver spoon in the mouth.
Commodity Trading Advisor. An individual or firm which advises others
about buying and selling futures and/or futures options.
Commodity Pool Operator. When an entity is used for trading it may be
required to register with the Commodities Futures Trading Commission
(CFTC) as a pool operator. The rules are relaxed if the number of investors
is less than 15 and the total amount of money involved is less than $400,000.
Chartered Financial Analyst® certification.
Chartered Market Technician certification.
Pattern Day Trader.
6.16) DBA or d/b/a?
“Doing Business As” Using a pseudonym. Using a
name for a business or operation that does not include
the legal name of its proprietor, the names of all partners,
or the official registered name of the entity that owns it.
“To Be Announced”, “To Be Ascertained”,
“To Be Arranged” or “To Be Advised” at a later point in time.
“To Be Confirmed” at a later point in time.
“To Be Determined”, “To Be Decided” at a later point in time.
“To Be Released”, “To Be Reviewed”,
“To Be Revealed” at a later point in time.
A&R stands for “artists and repertoire,” but many musicians
joke that A&R stands for “attitude and rejection.”
Joint Back-Office. Section 220.7(c) of Regulation T authorizes the creation
of JBO arrangements. These JBO arrangements permit “a creditor [to] effect
or finance transactions of any of its owners if the creditor is a clearing and
servicing broker or dealer owned jointly or individually by other
creditors.” 12 CFR 220.7(c).
Arthur Levitt , Chairman of the U.S. Securities and Exchange Commission
September 16, 1999 said:
When day-trading firms are organized as LLCs and individual day
traders contribute to the firm’s capital, the day traders are
permitted to trade using the firm’s capital. These LLC firms
typically participate in joint back office (“JBO”) arrangements,
which allow them to enhance their borrowing power. JBO
arrangements have become popular because they allow day-trading
firms to receive preferential margin treatment from their clearing
firms. Specifically, a day-trading firm that participates in a JBO
arrangement can receive credit from its JBO clearing firm on “good
faith” terms. As a result, the customer margin requirements found in
Regulation T and SRO rules do not limit the extension of credit to a
JBO participant. Rather, credit can be extended for up to 100
percent of the purchase price of the securities. As discussed below,
the SROs have proposed revisions to their rules that would make
these JBO arrangements more difficult to use.
Because of the borrowing power permitted by JBO arrangements, the
leverage of day-trading firms organized as LLCs is limited only by
the net capital rule. This essentially allows firms to leverage
their position 6 to 1, rather than the 2 to 1 leverage allowed day
traders under SROs’ rules.
1. Each JBO participant must be registered as
a broker-dealer pursuant to Section 15 of the Securities Exchange
Act of 1934 and subject to the capital requirements prescribed by
Rule 15c3-1 therein; and shall not be eligible to operate under the
provisions of SEC Rule 15c3-1(b)(i).
2. Each JBO participant must meet and maintain a minimum account
equity requirement of $1,000,000 with each clearing broker-dealer
where a JBO account is carried. If equity is below $1,000,000 the
carrying organization must issue a call for additional funds or
securities which shall be obtained within five business days.
If funds or securities sufficient to eliminate the deficiency are not
received within 5 business days, the carrying organization must
margin the account in accordance with the requirements prescribed
for a customer in Regulation T and Exchange Rule 12.3.
3. Each JBO participant must meet and maintain the ownership
standards established by the clearing broker-dealer; and
4. Each JBO participant must employ (or have access to) a qualified Series 27 principal.
Registered Options Trader engage in market making on the Floor of the exchange.
Former ROTs trading from off-Floor become subject to the following rules
and requirements not generally applicable to ROTs:
- Off-Floor traders are subject to the SEC Net Capital Rule 15c3-1 and are
required to maintain minimum net capital of at least $100,000 at all times.
The Net Capital Rule contains provisions on capital withdrawals, haircuts,
undue concentration charges, subordinated loans and notification for
certain events that do not apply to most ROTs.
- Off-Floor traders become subject to filing quarterly FOCUS Reports and,
in the interim months, a Net Capital Computation. In addition, off-Floor
traders are required by SEC Rule 17a-5 to have an annual audit performed
by an independent accountant.
- To take advantage of the greater leverage available, some off-Floor traders
establish a Joint Back Office (“JBO”) facility with their clearing firm1. While
this facility can exempt the JBO participant from Regulation T margin
requirements on positions, Amex Rule 462 (h) requires that the JBO
participant maintain at least $1 million equity in an account at
the clearing firm. Failure to do so for more than five consecutive
days will cause the JBO participant to become subject to
Regulation T margin. JBO participants, moreover, are required to
have a qualified Financial and Operational Principal associated
with the firm to ensure that the firm is aware of and complies
with all of the pertinent rules and requirements.
Registered Investment Adviser.
Investment Adviser Representative. IARs work for RIA firms.
This is the net change of all NYSE stocks on an uptick minus
all NYSE stocks on a downtick. Plus or minus 1000
tends to be an extreme reading.
The TRIN (also know as the Trading Index and the ARMS Index)
was invented by Richard Arms in the 1970s. It is calculated as follows:
(Advancing issues / Declining issues) divided by (Advancing
volume / Declining volume). If the index is above one, the average
volume of stocks that fell on the NYSE was greater than the average
volume of stocks that rose. If the index is below one, then the converse
is true. We watch the direction TRIN is moving to indicate the overall
trend of the market. For example, if the TRIN goes from .80 to 1.00,
this would indicate selling is coming into the market.
Designated Self Regulatory Organization.
Self Regulatory Organization, i.e. not regulated directly
as a government agency. NASD is a SRO.
more often it is used to mean: Standing Room Only
The National Association of Securities Dealers also known as the NASD,
is the regulatory body primarily responsible for the regulation of persons
involved in the securities industry in the United States. The Securities and
Exchange Commission delegated this responsibility to the NASD. The
NASD is a Self Regulatory Organization, or SRO, in that it is not directly a
All firms dealing in securities that are not regulated by another SRO such
as the Municipal Securities Rule making Board, the MSRB, are required
to be member firms of the NASD. Also, persons licensed to make securities
transactions with the public are known as registered representatives.
Commodity Futures Trading Commission is the federal regulatory agency
established by the CFTC Act of 1974 to administer the Commodity Exchange Act.
Chicago Mercantile Exchange.
Futures Commission Merchant is a merchant involved in the solicitation
or acceptance of commodity orders for future delivery of commodities
related to the futures contract market. A futures commission merchant
is able to handle futures contract orders as well as extend credit to
customers wishing to enter into such positions. These include many
of the brokerages that investors in the futures markets deal with.
Regulated Futures Contracts are approved by
the Commodity Futures Trading Commission.
Depository Trust Company is the central depository for the brokerage
community where stock and bond certificates are deposited or transferred
by the broker participants. The main function of DTC is to clear and settle
stock trades and to provide custody of securities in an automated
environment. For every trade, there is a buyer and a seller. DTC
provides an efficient and safe way for the buyer and seller to
exchange securities electronically and in a centralized location
eliminating the need for physical stock certificates and time for transit.
DTC is a member of the Federal Reserve system, owned by the
Depository Trust and Clearing Corporation (DTCC). DTCC, in turn, is
owned by several banks, brokerage houses and trading exchanges.
Digital Delivery Terms:
Delivery vs. Payment – the delivery of securities in exchange for an
asset, usually money.
Delivery vs. Receipt – the delivery of securities in exchange for a
signed receipt for the securities.
Exchange for Physical or Exchange of Futures for Cash- A transaction
in which the buyer of a cash commodity transfers to the seller a
corresponding amount of long futures contracts, or receives from
the seller a corresponding amount of short futures, at a price
difference mutually agreed upon. In this way, the opposite
hedges in futures of both parties are closed out simultaneously.
Also called AA (Against Actuals) or Ex-Pit transactions.
Transfer On Death. A natural person may hold accounts as TOD
so that upon their demise the account bypasses probate and
bypasses their will. JTWROS and Tenants in the Entirety
may also have TOD accounts.
Joint Tenants with Rights of Survivorship. When one party dies the
account bypasses the decedent’s will going directly into the survivor’s ownership.
Free Application for Federal Student Aid.
See Section 2 – Student Status for rules when
parent’s tax return is necessary.
Is FAFSA really due in February? You should try to file as soon after
January 1st as possible because the “powers that be” need to work
on your application. But the fact is that you can submit the application
on an honest, best efforts basis (for example, using the prior year’s
data as a guide) and then amend the submission at a later time.
FAFSA calls amending the application “making corrections” to the application,
and they allow such corrects to be made as much as a full year after
the initial due date. It is generally most advisable though to have
the final amended numbers submitted prior to the start of the semester.
End-User License Agreement A legal contract between the manufacturer
and/or the author and the end user of an application or software program.
This agreement generally tells how the software can and cannot be used
and any restrictions imposed (e.g., most EULA’s of proprietary software
prohibit the user from sharing the software with anyone else).
The EULA also is often referred to as the software license or user license.
Uniform Gifts to Minors Act which has been superseded
by the Uniform Transfers to Minors Act (UTMA) in some States.
Uniform Transfers to Minors Act. This is a trust like any other
trust except that the terms of the trust are set in the state statute
instead of being drawn up in a trust document.
6.44) UTMA regret?
The most common reason for regret over a custodial account is a
realization that the child may not handle a large sum of money in
a mature way at the age when control passes. When your child
is 8, you imagine he or she will be a thoughtful young adult when
the account passes to the child’s control. Ten years later you realize
that your child still has a lot of growing up to do.
The second most common reason for UTMA regret is learning how
the account will affect eligibility for financial aid. Often the original
motivation for the account was college savings. Ironically, using
UTMA to put college savings in your child’s name can make it more
difficult to finance higher education, because the financial aid formula
in effect imposes a penalty for assets owned by the child.
There’s a third reason for UTMA regret. Sometimes the parents put a
good chunk of money into the account and then find that they need it.
Maybe they’re trying to come up with a down payment for a new home.
Possibly they’ve simply run into hard times. It’s hard to stare a legitimate
financial need in the face knowing the cash you need is sitting right
there in the child’s account.
Another problem that sometimes comes up: parents set up an account
for one child and now there are other siblings. If the parents do not have
enough wealth to establish comparable accounts for the younger brothers
and sisters, they’re likely to regret having made the oldest child so wealthy.
Finally, I sometimes hear from people who simply had no idea what an
UTMA account was until after they set it up. They thought it was a way
of designating a future gift, which they could change at any time before
control passed to the child. No one told them they were making a current,
irrevocable gift when they transferred cash or other assets to the account.
Pension and Welfare Benefits Administration under the U.S. Department of Labor.
Employee Benefits Security Administration.
The Pension and Welfare Benefits Administration (PWBA) has changed
its name to the Employee Benefits Security Administration (EBSA).
The agency has a new Web site address,
www.dol.gov/ebsa and a new address for electronic inquiries,
www.askebsa.dol.gov exemption procedures:
Private Investments in Public Equities. Typically these are private placements
of unregistered securities. Observation: After years (decades actually) of telling
the SEC in detail about abuses with PIPEs and how the unregistered securities
were used to do naked shorting or a virtual shorting-against-the-box – which in
some cases started a short-selling death-spiral making the PIPEs investors rich
at the expense of the general public, finally the SEC on March 14, 2006 caught
up with and gave a token fine to three hedge funds and their portfolio manager
(Business Week, March 27, 2006, page 12).
White paper report
Cash-In-Lieu (of fractional stock shares). During a distribution
to shareholders at large, a shareholder might receive cash-in-lieu
of physical delivery if the item to be delivered is unavailable or
less than a whole unit is required by the contract. An example of
the latter would be a cash-in-lieu payment for a fractional share
due in a stock dividend distribution.
Committee on Uniform Security Identification Procedures.
The number consists of nine characters
(including letters and numbers) that uniquely identify a company or
issuer and the type of security. A similar system is used to
identify foreign securities (CUSIP International Numbering System).
Automated Customer Account Transfer Service (ACATS) is the National
Securities Clearing Corporation’s (NSCC) central processing system for
the fully automatic, electronic transfer of positions and accounts
between brokerage firms that are both participants of the NSCC’s
Covenants, Conditions and Restrictions are the governing documents that dictate
how a homeowners association operates and what rules the owners and/or
their tenants and guests are subject to. These legal documents might
also be called the bylaws, the master deed, the houses rules or
another name. These documents and rules are legally enforceable by
the homeowners association, unless a specific provision conflicts
with federal, state or local laws.
6.52) F9 Monkey?
A job description in the credit derivative industry. These particular employees
simply had to press “F9” on their keyboard after entering some basic information
and the results of sophisticated algorithms would appear on their computer monitors,
even if the employee had little or no idea or understanding about what was
going on to support to computations.
When the financial crisis hit and the markets crashed, these users would keep
pressing F9 over and over and get numbers that were totally unexpected. They’d
sit in bewilderment and ask: “How can we have lost so much money?” “What happened?”
Securities Industry Processor
consolidates and disseminates all securities prices for the Nasdaq.
Distributed Denial of Service is where an extremely
large number of computer systems are coordinated and used to target
a single computer system with the purpose of overloading it and
thereby causing a denial of service to the users.
Business Continuity Plan details how, in the event of an internal or
external threat, employees will stay in touch and keep doing their
jobs when faced with a disaster or emergency, such as a fire at
the office or a DDoS cyber-attack.
Continuity Of Operations Plan;
Continuity of Operations;
Continuing Capabilities are other names for BCP.
Financial Management, Analyst, and