The National Securities Markets Improvement Act (NSMIA) was enacted in 1996 and was designed to address a number of perceived problems in the national securities markets. NSMIA amended a number of federal securities laws, including the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940.
NSMIA's primary purpose was to create a more uniform regulatory regime for securities markets by preempting state laws that conflicted with federal securities laws. NSMIA also amended a number of federal securities laws to remove certain regulatory burdens that were seen as unduly burdensome or unnecessary. Finally, NSMIA made a number of technical and clarifying amendments to the federal securities laws. Which of the following is are exempt from the registration requirements of the Uniform Securities Act? All of the following are exempt from the registration requirements of the Uniform Securities Act:
1. Federal covered securities.
2. Intrastate offerings.
3. Exempt securities.
4. Exempt transactions. Do securities laws apply to private companies? The answer is that it depends on the type of private company and the type of securities involved. For example, if a private company is selling stock to the public, then the answer is almost certainly yes - the company would be subject to securities laws. However, if a private company is simply selling stock to a small group of investors, the answer is less clear. In general, though, it is safe to say that securities laws do apply to private companies to some extent. How does market maker determine price? In general, a market maker is a firm that stands ready to buy or sell a security at a specified price. The market maker's quoted bid-ask prices represent the prices at which the market maker is willing to purchase (or bid for) and sell (or ask for) the security. The bid price is always lower than the ask price, and the difference between the two is called the bid-ask spread.
The market maker is essentially providing a service to investors by creating liquidity in the market and, as such, market makers typically charge a commission for their services. In some cases, the market maker may be the only firm willing to buy or sell a particular security, which can give the market maker significant power to set the price. In other cases, there may be many market makers for a particular security, which can help to keep prices more competitive.
It is important to remember that market makers are not required to trade at their quoted prices; they will only do so if it is beneficial to them. For example, if a market maker is quoted at $10 bid/$10.05 ask and an investor wants to sell 100 shares, the market maker will likely buy the shares for $10 each, as this is the market maker's quoted bid price. However, if the market maker believes that the shares are worth more than $10 each, the market maker may only purchase 50 shares or may not purchase any at all.
Similarly, if an investor wants to buy 100 shares from a market maker quoted at $10 bid/$10.05 ask and the market maker believes the shares are only worth $9.80 each, the market maker may sell the shares for $9.80 each (the market maker's quoted ask price) or may not sell any at all.
In general, then, the market maker will buy or sell shares at its quoted prices only if it believes that it can make a profit on
Do market makers charge a markup?
A market maker is a company or individual that quotes both a bid and ask price in a financial instrument or commodity held in inventory, intending to make a profit on the bid-offer spread, or difference.
The U.S. Securities and Exchange Commission (SEC) defines a market maker as "a firm that stands ready to buy and sell securities for its own account on a regular and continuous basis at prices it displays publicly."
In order for a market maker to profit from the bid-offer spread, it must generally charge a markup on the prices it quotes. Which of the following transactions would not be exempt under the Uniform Securities Act? The sale of an unregistered security.
The sale of an unregistered security would not be exempt under the Uniform Securities Act.