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Glossary A B C D E F G H I J K L M N O P Q R S T U V W X Y Z S S&P Standard & Poor's Corporation - A company well known for its rating of stocks and bonds according to investment risk (the Standard & Poor's Rating) and for compiling the Standard & Poor's Index—commonly called the Standard & Poor's 500—that tracks 400 industrial stocks, 20 transportation stocks, 40 financial stocks, and 40 public utilities as a measurement indicative of broad changes in the market.
Safe harbor - The " Safe Harbor for Forward-Looking Information" allows company management to discuss in good faith a company's prospects and financial projections with analysts and investors without fearing litigation. From the Private Securities Litigation Reform Act of 1995.
Same-day settlement money market sells - A money market sell that you wish to settle same day must be entered before 9:30 am. This is referred to as a money market AM order or a same day money market settlement.
SAR-SEP - A Salary Reduction Simplified Employee Pension Plan is a salary reduction retirement plan for sole proprietors or small businesses with fewer than 25 employees. SAR-SEPs can no longer be established; however, plans established prior to 1997 can still exist. SAR-SEPs were replaced with the SIMPLE IRA. Secondary market - Markets where securities are bought and sold subsequent to original issuance.
Secondary offering - A registered offering of a large block of a security that has been previously issued to the public. The blocks being offered may have been held by large investors or institutions, and proceeds of the sale go to those holders, not the issuing company. Also called secondary distribution.
Sector Fund - A mutual fund that invests in the stocks of a particular industry, such as the airline industry.
Securities - A generic name for any investment instrument. Stocks and bonds are types of securities.
Securities Act of 1933 - The "disclosure statute" requires companies to register stock offerings to the public, and disclose important facts through a prospectus, and additional information filed with the Securities and Exchange Commission.
Securities Acts Amendments of 1975 - Considered the most significant securities legislation since the 1934 Act, this act ended fixed commission rates, initiated action toward development of a national market system, and granted the Securities and Exchange Commission final say in the adoption of rules by any of the self-regulatory organizations (SROs).
Securities analyst - An individual who does investment research and makes recommendations to buy, sell, or hold. Most analysts specialize in a single industry or business sector.
Securities and Exchange Commission (SEC) - The federal agency created by the Securities Exchange Act of 1934 to administer that act and the Securities Act of 1933. The statutes administered by the SEC are designed to promote full public disclosure and protect the investing public against fraudulent and manipulative practices in the securities markets. Generally, most issues of securities offered in interstate commerce or through the mails must be registered with the SEC.
Securities exchange - A physical facility in which buyers and sellers of securities, or their agents, meet to effect transactions.
Securities Exchange Act of 1934 - This law created the Securities and Exchange Commission to regulate the securities industry. The law outlawed manipulative and abusive practices in the issuance of securities; it required registration of stock exchanges, brokers and dealers, and registration of exchange-listed securities; it also required disclosure of certain financial information and insider activity. The law gave the SEC surveillance authority over exchanges and brokers, and the authority to regulate margin requirements. The law also authorized the SEC to enforce the Securities Act of 1933. In 1938, the law was amended to allow regulation of over-the-counter markets through self-regulated organizations. Securities Investor Protection Corporation (SIPC) - A nonprofit corporation that insures investors against the failure of brokerage houses, similar to the way that the Federal Deposit Insurance Corp. insures bank deposits. Coverage is limited to a maximum of $500,000 per account, but only up to $100,000 in cash. SIPC does not insure against market risk.
Self Directed IRA - An IRA in which the holder has the freedom to select, or "self-direct" the investment options that best fits his individual investment objectives. This kind of IRA is subject to the same types of restrictions and limitations as a regular IRA. First Clearing, LLC as Custodian offers self directed IRAs. Seller's market - A condition of the market in which there is a scarcity of goods available and hence sellers can obtain better conditions of sale or higher prices. Opposite of buyer's market.
SEP IRA - A written arrangement (or plan) that allows an employer to make deductible contributions for the benefit of eligible employees. This type of traditional IRA can be set up by self-employed individuals and small businesses with fewer than 25 employees. Settlement - The conclusion of a securities or options transaction when a customer pays a broker/dealer for securities or options purchased or delivers securities or options sold and receives from the broker the proceeds of the sale.
Settlement date (T+3) - Date on which a securities transaction must be settled. Buy orders must be paid for in cash and sell orders must have securities in legal (good) delivery form presented to the new owner. REGULAR WAY SETTLEMENT of stock and bond transactions is three business days after the trade was executed. Listed options, government securities and mutual funds settle the next business day following the transaction. The brokerage firm representing the customer must settle on the specified settlement date whether or not the customer has paid the monies or delivered securities to the firm.
Shareholder of record - The name of an individual or entity that an issuer carries on its books as the registered holder (not necessarily the beneficial owner) of the issuer's securities. Short Against the Box - A short sale where the investor owns the security, but does not want to use the shares for delivery, so he borrows them from the brokerage firm. This is usually done to lock in a profit, while delaying the tax consequences to a subsequent year.
Short interest - The total number of shares of a security that have been sold short by customers and securities firms that have not been repurchased to settle short positions in the market.
Short position - The amount of stock that an individual has sold and is not owned or a position wherein a person's interest in a particular series of options is as a net writer (i.e., the number of contracts sold exceeds the number of contracts bought).
Short sale - Sale of any security not owned by the seller. The security is 'borrowed' from the brokerage firm and all short sales must be done in a short (margin related) account. Customer's must state that a sale will be 'short' at the time the order is placed with the broker. The customer "selling short" is using a legitimate trading strategy and assumes the risk that he will be able to buy the stock at a more favorable price than the price at which he sold short. See the explanation of short selling for more complete information on short selling.
Short Sale Rule - A NASDAQ rule that prohibits NASD members from selling a NASDAQ National Market stock at or below the inside best bid when that price is lower than the previous inside best bid in that stock.
Short selling - Selling a security with the idea of buying to offset it at a later date. Short Term Gain (Loss) - A realized profit or loss on an investment held for six months or less. SIC codes - Standard Industrial Classification codes. A numbering system established by the U.S. Office of Management and Budget that identifies companies by industry. It is used to promote the comparability of economic statistics from various sectors of the U.S. economy.
SIMPLE IRA - A SIMPLE IRA, or Savings Incentive Match Plan, is a plan adopted by an employer which allows the eligible employees to make contributions to their SIMPLE IRAon a pre-tax basis. The money in a SIMPLE IRA earns and compounds on a tax-deferred basis until withdrawn. Self-employed individuals and employers with fewer than 100 employees and who have no other retirement plan may adopt a SIMPLE plan.
Specialist - A participant of the exchange who trades for their firm's or their own account and is responsible for maintaining a fair and orderly market in whatever issue has been allocated to them by providing bid and ask markets. They are also responsible for orders entrusted to them for execution. Speculator - A market participant who tries to profit from buying and selling futures and ptions contracts by anticipating future price movements. Speculators assume market price risk and add liquidity and capital to the futures markets.
Spin-off - Form of a corporate reorganization that results in a subsidiary or division becoming an independent company. In a traditional spin-off, shares in the new entity are distributed to the parent corporation's shareholders of record on a pro-rata basis. Split - The division of outstanding shares of a corporation into a larger number of shares. For example: in a 3-for-1 split, each holder of 100 shares before would have 300 shares, although the proportionate equity in the company would remain the same. Spousal IRA - An individual retirement account (IRA) opened in the name of a nonworking spouse. A married couple that establishes such an IRA may contribute up to $2,250 between two IRAs as long as neither account exceeds a contribution of $2,000. If both spouses were employed, they could each contribute up to $2,000 for a combined total of $4,000. Spread (options) - The purchase and sale of options which vary in terms of type (call or put), strike prices, expiration dates, or both. May also refer to an options contract purchase (sale) and the simultaneous sale (purchase) of a futures contract for the same underlying commodity.
Spread (price) - “The difference between the bid and asked price for a stock. For example, if a stock is bid at 25 and asking 25 1/4 it has a 1/4 point (equal to 25 cents) spread. The spread for a security is influenced by a number of factors, including:
Stock - An instrument that signifies an ownership position in a corporation.
Stock dividend - A payment of a corporate dividend in the form of stock rather than cash. The dividend is usually expressed as a percentage of the shares held by shareholder. For instance, a shareholder with 100 shares would receive 5 shares as the result of a 5% stock dividend.
Stock index - An indicator used to measure and report value changes in a selected group of stocks. How a particular stock index tracks the market depends on its composition–the sampling of stocks, the weighing of individual stocks, and the method of averaging used to establish an index.
Stock Market - A market in which shares of stock are bought and sold.
Stock Power - A form used in the transfer of registered securities from one owner to another. A stock power replicates the assignment form on the back of the stock certificate, but it is separated from the certificate. Hence, a stock power is sometimes called an "assignment separate from certificate". Although both achieve the same goal, a stock power has a safety advantage in being separate. Stock split - Occurs when a corporation increases the number of outstanding shares of stock without any change in the shareholders aggregate market value at the time of the split. In a split, the share price declines and shares held increases. A holder of 50 shares before a 2-for-1 split will have 100 shares at a lower price after the split.
Stock symbol - A unique letter symbol assigned to a security. For U.S. securities, one- two- and three-letter symbols indicate that the security is listed and trades on an exchange. NASDAQ traded securities have a unique four- or five-letter symbol assigned. If a fifth letter appears on a NASDAQ security, it identifies the issue as other than a single issue of common stock or capital stock. A list of fifth-letter identifiers and a description of what each represents follows:
* The letter "C" as a fifth character in a security symbol indicates that the issuer has been granted a continuance in NASDAQ under and in exception to the qualification standards for a limited period. Stop limit order - An order that goes into force as soon as there is a trade at the specified stop price. The order, however, can only be filled at the limit price or better. The stop price and the limit price can be the same or different. The stop price is the price level specified in the order.
Stop order - An order to buy or sell at a specific price or better. A stop order becomes a market order when the stock sells at or beyond the specified price and may not be executed at that price.
Stop-loss order - A customer order to a broker that sets the sell price of a stock below the current market price, therefore protecting profits that have already been made or preventing further losses if the stock drops. See limit order.
Straddle (options) - The purchase or sale of both a put and a call having the same strike price and expiration date. The buyer of a straddle benefits from increased volatility, and the seller benefits from decreased volatility.
Strangle - An options position consisting of the purchase or sale of put and call options having the same expiration but different strike prices.
Street name - Securities held in the name of a brokerage firm or its nominee rather than the customer's name. All securities purchased on margin and those the customer wishes to have the broker hold are held in street name. Since the securities are in the broker's custody, transfer of the shares at the time of sale is easier than if the stock were registered in the customer's name and physical certificates had to be transferred. Strike price - The stated price per share for which the underlying security may be purchased (in the case of a call) or sold (in the case of a put) by the option holder upon exercise of the option contract.
Substantially equal periodic payments - Distributions taken from a traditional IRA by an individual that is under age 59 1/2, that are calculated using 1 of 3 IRS approved distribution methods and are taken at least annually. The distributions are payments over the life of the accountholder (or life expectancy), or over the lives (or joint life expectancies) of the accountholder and their beneficiary. Substantially Equal Periodic Payments must be taken for a minimum of 5 years AND until the individual reaches age 59 1/2, whichever is later. If Substantially Equal Periodic Payments are stopped or altered in any way, the 10% premature distribution penalty will apply for all years that distributions were taken as well as late fees and interest.
Suitability - A suitability violation occurs when and investment made by a broker is inconsistent with the investor's objectives, and the broker knows or should know the investment is inappropriate. Swap - A custom-tailored, individually negotiated transaction designed to manage financial risk, usually over a period of one to 12 years. Swaps can be conducted directly by two counterparties, or through a third party such as a bank or brokerage house. The writer of the swap, such as a bank or brokerage house, may elect to assume the risk itself, or manage its own market exposure on an exchange. Swap transactions include interest rate swaps, currency swaps, and price swaps for commodities, including energy and metals. In a typical commodity or price swap, parties exchange payments based on changes in the price of a commodity or a market index, while fixing the price they effectively pay for the physical commodity. The transaction enables each party to manage exposure to commodity prices or index values. Settlements are usually made in cash.
Switching - In mutual funds, the movement of assets from one fund to another. This is usually done within a family of funds, but can be done between different fund families. Within a no load family, there usually is no charge or a nominal transaction fee. This is also usually true for a load family as long as the fund being switched into has the same sales charge (or less) as the one that the investor already owns. When switching to a mutual fund that belongs to a different family of funds, if the new fund is a no load--there is no charge, and if the new fund is a load fund--it is sales charge of the new fund.
Syndicate - A group of investment banking firms formed to conduct an underwriting of a new security issue.
Syndicate manager - Also called the managing underwriter or book manager, the syndicate manager works with a company to prepare a new stock issue and register it with the Securities and Exchange Commission. The manager often also organizes the syndicate to spread the risk of a new issue. Glossary |
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