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SIE EXAM SECURITIES INDUSTRY ESSENTIALS EXAM
2025 | ALL QUESTIONS AND CORRECT ANSWERS |
ALREADY GRADED A+ | LATEST VERSION
Securities and Exchange Commission (SEC) - (ANSWER)The securities industry's
primary regulatory body. Broker-Dealers that transact securities business with
customer or with other broker-dealers must apply and be approved for
registration.
SEC regulates all exchanges and trading markets.
Self-regulatory organizations - (ANSWER)SROs - function UNDER the SEC's
oversight. Each SRO is accountable to the Commission for enforcing federal
securities laws, as well as supervising securities practices within an assigned
jurisdiction.
Largest SRO? - (ANSWER)FINRA (Financial Industry Regulatory Authority)
regulates all matters related to investment banking, trading in the OTC market,
trading in NYSE-listed securities, and the conduct of FINRA member firms and
associated persons.
SROS:
Chicago Board Options Exchange (CBOE) - (ANSWER)regulates all matters related
to trading in standardized options and related contracts listed on that exchange
SROS:
Municipal Securities Rulemaking Board (MSRB) - (ANSWER)regulates all matters
related to the underwriting and trading of state and municipal securities.
Regulates but does NOT have enforcement powers--it depends on other SROS
(finra) to enforce its rules.
Federal and State regulatory agencies:
Department of the Treasury/IRS - (ANSWER)is an executive department and and
the treasury of the US federal government.
Collection of taxes = IRS
The Federal Reserve Board (FRB) - (ANSWER)consists of 12 regional federal
reserve banks and hundreds of national and state banks that belong to the
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system.
The FRB determines monetary policy and takes actions to implement its policies
The Securities Investor Protection Corporation (SIPC) was created under the
Securities Investor Protection Act of 1970: - (ANSWER)The corporation is a
nonprofit membership organization. SIPC members pay assessments into a
general insurance fund that is used to meet customer claims in the event of a
broker-dealer bankruptcy
All broker/dealers registered with the SEC must be SIPC memebrs except? -
(ANSWER)-banks that deal exclusively in municipal securities
-firms that deal exclusively in U.S. government securities
-firms that deal exclusively in redeemable investment company securities
Basic coverage under SIPC? - (ANSWER)no more than $500,000 per separate
customer
NOT per separate account
(of that 500K, SIPC covers no more than 250,000 in cash.
SIPC does not cover what? - (ANSWER)commodities or commodities futures
contracts, because they are not considered securities
Federal Deposit Insurance Corporation (FDIC) - (ANSWER)Created during the
great depression in response to bank failures.
an independent agency of the US federal government that preserves public
confidence in the banking system by insuring deposits.
The FDIC guarantees what - (ANSWER)$250,000 for each deposit ownership
category in each insured bank.
Investors - (ANSWER)someone who provides money or resources for an
enterprise, such as a corp, with the expectation of financial or other gain.
Investors:
Retail investors- - (ANSWER)an individual who makes investments such as the
purchase of securities for his or her own personal account rather than for an
organization
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Investors:
Institutional investor- - (ANSWER)an entity that pools money to purchase
securities and other investment assets. (banks, insurance companies, pensions,
hedge funds, and mutual funds)
Investors:
Accredited Investor- - (ANSWER)defined as:
a net worth of 1 million or more
has an annual income of 200K or more in each of the two most recent years
Broker-Dealer - (ANSWER)each member firm broker-dealer operates under an
individualized membership agreement with FINRA or other SRO. The membership
agreement explains with lines of business the broker-dealer undertakes.
Full service BDs - (ANSWER)offer all types of investment products: stocks, bonds,
mutual funds, options and many others
Carrying Firm - (ANSWER)carries customer accounts and accepts funds and
securities from customers; carrying and clearing firms typically rank among the
larger broker-dealers.
A fully disclosed firm (introducing BD) - (ANSWER)one that introduces its
customers to a clearing firm
Prime Brokers - (ANSWER)Prime account allows a customer to select one
member firm (prime broker) to provide custody and other services, while other
firms -called executing brokers- handle all trades placed by the customer.
Key Advantage: trading with multiple brokerage houses while still maintaining a
centralized master account
Capital Markets - (ANSWER)The stock and bond markets.
Both public and private sectors sell securities in order to raise funds.
Primary Markets - (ANSWER)Where securities are sold to investing public in what
SIE EXAM SECURITIES INDUSTRY ESSENTIALS EXAM
2025 | ALL QUESTIONS AND CORRECT ANSWERS |
ALREADY GRADED A+ | LATEST VERSION
Securities and Exchange Commission (SEC) - (ANSWER)The securities industry's
primary regulatory body. Broker-Dealers that transact securities business with
customer or with other broker-dealers must apply and be approved for
registration.
SEC regulates all exchanges and trading markets.
Self-regulatory organizations - (ANSWER)SROs - function UNDER the SEC's
oversight. Each SRO is accountable to the Commission for enforcing federal
securities laws, as well as supervising securities practices within an assigned
jurisdiction.
Largest SRO? - (ANSWER)FINRA (Financial Industry Regulatory Authority)
regulates all matters related to investment banking, trading in the OTC market,
trading in NYSE-listed securities, and the conduct of FINRA member firms and
associated persons.
SROS:
Chicago Board Options Exchange (CBOE) - (ANSWER)regulates all matters related
to trading in standardized options and related contracts listed on that exchange
SROS:
Municipal Securities Rulemaking Board (MSRB) - (ANSWER)regulates all matters
related to the underwriting and trading of state and municipal securities.
Regulates but does NOT have enforcement powers--it depends on other SROS
(finra) to enforce its rules.
Federal and State regulatory agencies:
Department of the Treasury/IRS - (ANSWER)is an executive department and and
the treasury of the US federal government.
Collection of taxes = IRS
The Federal Reserve Board (FRB) - (ANSWER)consists of 12 regional federal
reserve banks and hundreds of national and state banks that belong to the
,2|Page
system.
The FRB determines monetary policy and takes actions to implement its policies
The Securities Investor Protection Corporation (SIPC) was created under the
Securities Investor Protection Act of 1970: - (ANSWER)The corporation is a
nonprofit membership organization. SIPC members pay assessments into a
general insurance fund that is used to meet customer claims in the event of a
broker-dealer bankruptcy
All broker/dealers registered with the SEC must be SIPC memebrs except? -
(ANSWER)-banks that deal exclusively in municipal securities
-firms that deal exclusively in U.S. government securities
-firms that deal exclusively in redeemable investment company securities
Basic coverage under SIPC? - (ANSWER)no more than $500,000 per separate
customer
NOT per separate account
(of that 500K, SIPC covers no more than 250,000 in cash.
SIPC does not cover what? - (ANSWER)commodities or commodities futures
contracts, because they are not considered securities
Federal Deposit Insurance Corporation (FDIC) - (ANSWER)Created during the
great depression in response to bank failures.
an independent agency of the US federal government that preserves public
confidence in the banking system by insuring deposits.
The FDIC guarantees what - (ANSWER)$250,000 for each deposit ownership
category in each insured bank.
Investors - (ANSWER)someone who provides money or resources for an
enterprise, such as a corp, with the expectation of financial or other gain.
Investors:
Retail investors- - (ANSWER)an individual who makes investments such as the
purchase of securities for his or her own personal account rather than for an
organization
, 3|Page
Investors:
Institutional investor- - (ANSWER)an entity that pools money to purchase
securities and other investment assets. (banks, insurance companies, pensions,
hedge funds, and mutual funds)
Investors:
Accredited Investor- - (ANSWER)defined as:
a net worth of 1 million or more
has an annual income of 200K or more in each of the two most recent years
Broker-Dealer - (ANSWER)each member firm broker-dealer operates under an
individualized membership agreement with FINRA or other SRO. The membership
agreement explains with lines of business the broker-dealer undertakes.
Full service BDs - (ANSWER)offer all types of investment products: stocks, bonds,
mutual funds, options and many others
Carrying Firm - (ANSWER)carries customer accounts and accepts funds and
securities from customers; carrying and clearing firms typically rank among the
larger broker-dealers.
A fully disclosed firm (introducing BD) - (ANSWER)one that introduces its
customers to a clearing firm
Prime Brokers - (ANSWER)Prime account allows a customer to select one
member firm (prime broker) to provide custody and other services, while other
firms -called executing brokers- handle all trades placed by the customer.
Key Advantage: trading with multiple brokerage houses while still maintaining a
centralized master account
Capital Markets - (ANSWER)The stock and bond markets.
Both public and private sectors sell securities in order to raise funds.
Primary Markets - (ANSWER)Where securities are sold to investing public in what
