Chapter3SecuritiesMarketsChapter3coversSecondarymarketsandthemarketmakersThemechanicsofinvestinginsecuritiesForeignSecuritiesThemarginpurchaseandshortsaleofstocksRegulationofsecuritiesindustryMayo/BasicInvestments-Ch032Chapter3SecuritiesMarketSection1-SecondaryMarketsandroleofmarketmakersSection2-TheMechanicsofInvestinginSecuritiesSection3—ForeignSecuritiesSection4--ThemarginpurchaseandshortsaleofstocksSection5RegulationofsecuritiesindustryMyo/BasicInvestments-Ch033Section1

—SecondaryMarketsandroleofmarketmakers

levelsofsecuritiesmarketsroleofmarketmakerspricespreaddeterminationofpricesreportingoftransactionscompositetransactions（混合交易）

Characteristics?

Differentrequirementsforgoingpublic?tosatisfydifferentneedsoffinancing

?

themorenationwide,thestricterrequirements,andthemorefundsraised?

notclose-end,connectedeachotherlevelsofsecuritiesmarketsTwolevelsSecondaryMarketsPrimaryMarkets1234BigBoard(NYSE,AMEX)OTC(Nasdaq)Blocktrades(OTCBB,PinkSheets-NQB)Fourthmarkets(Instinet)電子交易系統(tǒng)FourtypesRoleofMarketMakers

DealeranyoneengagesinthebusinessofbuyingandsellingforhisownaccountSpecialistsdealersontheNYSEwhomaintainsanorderlymarketinsecuritiesMarketmakersDealersintheOTCmarkets,suchasNASDAQ

發(fā)行者（籌資者）

投資者（股東）新發(fā)行的股票資金

投資者投資者投資者股票股票資金資金發(fā)行市場(chǎng)二級(jí)市場(chǎng)交易所交易參與方證券交易所結(jié)算所經(jīng)紀(jì)商和自營(yíng)商投資者roles12OffertobuysecuritiesfromanysellerOffertosellsecuritiestoanypurchaser

makemarketsinsecuritiesTransactions

Aroundlot※thenormalunitoftrading※usually100sharesofstocksOddlots◎smallerthanthegeneralunitofsale◎37sharesofstocksVastmajorityoftradesPriceSpreadSecuritydealersquotepricesonabidandaskbasis.Bid—buyingpriceAsk—sellingpricespreadThedifferencebetweenthebidandtheaskpricesFormarketmakers—aprimarysourceofcompensationForinvestors—costofinvestingDeterminationofPricesThesecuritypricesarequotedbymarketmakersaresetbythedemandfromallbuyersandthesupplyfromallsellersofsecurities.Equilibriumprice?

quotedbymarketmakers;?equatesthesupplywiththedemand;

Ifquoteabovetheequilibriumprice?excessivesupply?absorbedbymarketmakersIfquotebelowtheequilibriumprice?

excessivedemand?providedbymarketmakersMarketmakerscannotquotethebidandaskpricesatwill,andtheytrytosetasecurity’sequilibriumprice.另外一種證券交易方式：競(jìng)價(jià)交易競(jìng)價(jià)制度,也稱(chēng)指令(委托)驅(qū)動(dòng)交易制度、雙向拍賣(mài)制度,主要特點(diǎn)是嚴(yán)格遵循價(jià)格優(yōu)先、時(shí)間優(yōu)先的原則

競(jìng)價(jià)交易制度競(jìng)價(jià)制度又分成連續(xù)競(jìng)價(jià)制度和集合競(jìng)價(jià)制度,前者適用于日內(nèi)連續(xù)交易,對(duì)市場(chǎng)流動(dòng)性的要求最高；后者適用于確定開(kāi)盤(pán)、收盤(pán)價(jià)格等,對(duì)市場(chǎng)流動(dòng)性的要求相對(duì)較低

ReportingofTransactionsDailytransactionsonthelistedexchangearereportedbythefinancialpress.Weeklysummariesarealsoreportedinseveralpublications.VariationinthereportingSomesimilarformatYTD%CHGPercentagechangeinthepriceofthestockduringthecurrentcalendaryearHIThehighpricesofthestockLOThelowpricesofthestockSTOCKThenameofthecompany(SYM)ThetickersymbolinboldprintDIVAnnualdividendpaidorannualdividendrateYLD%ThedividenddividedbythepriceofthestockPETheratioofthestockpricetothecompany’sper-shareearningsVOL100sThevolumeofsharestradedexpressedinhundredsLASTTheclosingpriceofthestockNETCHGThechangefromtheclosingpriceonthepreviousdayoftradingOtherreportingThereportingofNasdaqnational-marketissuesisessentiallythesameasthereportingofNYSE-listedsecurities.納斯達(dá)克全國(guó)市場(chǎng)板ThereportingofNasdaqsmallcapissuesorbulletinboard(OTCBB)issues:NotreportedinthefinancialpressbutinthepinksheetsContents:information,dividends,volume,lastprice,pricechanges;納斯達(dá)克小公司市場(chǎng)板Section2:

TheMechanicsof

InvestinginSecuritiesA.B.C.D.RoleofbrokersLongandshortpositionsTypesoforderCashandmarginAccountsE.DeliveryofSecuritiesF.CostofInvestingGShortSale交易所交易參與方證券交易所結(jié)算所經(jīng)紀(jì)商和自營(yíng)商投資者A-RoleofBrokersbrokerAnagentwhohandlesbuyandsellordersforaninvestorBrokeragefirmsDealers—marketmakersBrokers—accountexecutives(賬戶(hù)執(zhí)行人)Forthefirms’accountForcustomers’accountsHowtobecomebrokers?PasstheproficiencyexaminationadministeredbytheNationalAssociationofSecuritiesDealers;Practices;Aregisteredrep.Twokindsofbrokeragefirms:full-servicefirms—higherfeesandcommissions;moreservicesdiscountbrokeragefirms—lowercommissions,lessservices;B.Long&ShortPositionsAninvestorhasonly2coursesofaction,whichinvolveoppositepositions.2oppositepositionsBull(long)position多頭Bear(short)position空頭Bullish看漲的Bearish看跌的Expectingasecurity’spricetorisePurchasingthesecurityTotakealongposition;BebullishExample:---tobuy100sharesofAB&Cfor$55;---thepricerisesto$60;---theprofitonthelongpositionis$5pershare.LongPosition:Owningassetsfortheirincomeandexpectingpossiblepriceappreciation.Expectingasecurity’spricetofallSellingthesecurityTotakeashortposition;Bebearish;Investorsholdscashorplacesthefundsininterest-bearingshort-termsecurities(T-billsorasavingsaccount).Someinvestorsmayspeculate—sellshort;andgetprofits.ShortPosition:Sellingassetsforpossiblepricedecline;beingshortinasecurityoracommodity.C.TypesofOrdersTypesoforders

TobuyTosell

Marketorder市價(jià)委托Limitorder限價(jià)委托Dayorder當(dāng)日有效委托指令

Good-till-canceledorder長(zhǎng)期有效委托指令

Stoporder止損委托Stop-lossorderStop-sellorder

MarketorderLimitorder

證券交易委托指令是投資者通知經(jīng)紀(jì)人進(jìn)行證券買(mǎi)賣(mài)的指令，其主要種類(lèi)有：

(1)市價(jià)委托（MarketOrder）

(2)限價(jià)委托(LimitOrder)(3)停止損失委托（StopOrder）

(4)停止損失限價(jià)委托（StopLimitOrder）

證券交易委托指令的種類(lèi)AMarketOrderMarketorderAnordertobuyorsellatthecurrentmarketpriceorquoteBestpricecurrentlyavailableInvestorsdon’tneedtosetapriceinhisorder2.Generallyexecutedatorveryneartheaskingorbidprice.Investorsareassuredofbuyingorsellingthesecuritysoonbutnotassuredofexecutionatthecurrentlyquotedpriceduetothepricechanges;ALimitOrderAlimitorderAnorderplacedwithabrokertobuyorsellataspecifiedprice12A-day-order

isanorderplacedwithabrokerthatiscanceledattheendofthedayifitsisnotexecuted.A-good-till-canceled-order

isanorderplacedwithabrokerthatremainsineffectuntilitisexecutedbythebrokerorcanceledbytheinvestor.Investorsneedtosetaprice(p)inhisorderBuyingprice≤pSellingprice≥pButinvestorsarenotinsuredofexecutionAStopOrderAstoporderAsellorderdesignedtolimitaninvestor’slossortoassureaprofitonapositioninasecurity12Astop-lossorderisanorderwhichspecifiesthepricebelowthecostofthesecurityatwhichthebrokerisauthorizedtosell.Astop-sellorderisanorderwhichspecifiesthepriceabovethepurchasepriceatwhichthebrokerisauthorizedtosell.Astop-lossorderPurchasedfor$50pershare$45pershare(-10%)Thesellingpriceisatorbelow$45pershare.Astop-sellorderPurchasedfor$50pershare$60pershareTolimitthepotentialprofitifpricecontinuingtorise掛單于現(xiàn)價(jià)之下追空Comparisonoflimit,stopandmarketorderLimitorderinsuresthepricesetintheorderbutnottheexecutionStoporderinsurestheexecutionbutnotinsurestheprice(likemarketorder)MarketorderinsurethesoonestexecutionatorverynearthecurrentquotingpriceDifferencesLimitorders&StopordersTosell$20$25buyAlimitordertosell/purchaseat$25:therealsell/purchasingpricewouldbemore/lessthan$25orequalto$25.Astop-lossordertosellat$20:therealsellingpricemaybelessthan$20.$19TosellAStop-limitOrderThesaleorder;Combinesastop-losswithalimitorder;Tosell$25$20Astop-limitorderat$20$19AConfirmationStatement

交易確認(rèn)書(shū)、確認(rèn)函

Astatementreceivedfromabrokeragefirmdetailingthesaleorpurchaseofasecurityandspecifyingasettlementdate.

ExampleAninvestorbought100sharesofCleverpakCorporationwiththeunitpriceof$12.13.SettlementDate—thedaythepaymentisdueTransactionfees—commissions，transferfeeandothermiscellaneousfees過(guò)戶(hù)費(fèi)和雜費(fèi)Unitprice;totalamountT+3:threebusinessdaysafterthetradedate;1234D.CashandMarginAccountsCashAccountsInvestorspaytheentirecostofsecuritiesincash.MarginAccountsInvestorspurchasesthesecuritiespartiallywithcashandpartiallywithcreditsuppliedbybrokers.MarginRequirementTheminimumpercentageofthetotalpricethattheinvestorpayandissetbytheFederalReserveBoard.IndividualbrokersmayrequiremoremarginInvestorspayinteresttothebrokerwholends;InvestorsusemargintoincreasepotentialROI;ExampleofMarginRequirement1CashMargin(60%requirement)Buyingprice$1000$1000(with$600cashpaymentand$400borrowed)Sellingprice$1400$1400profits$400$400ROI40%67%Notice:Theuseofmarginisfavorable.ExampleofMarginRequirement2CashMargin(60%requirement)Buyingprice$1000$1000(with$600cashpayment)Sellingprice$700$700losses$300$300ROI-30%-50%Notice:Theuseofmarginisunfavorable.ExampleWhat’stheROIonthecashpurchaseandmarginpurchaserespectively?(Lastparagraphonp19)ExampleofMarginRequirement3CashMarginSaleprice$1400$1400Commission

50/70

50/70Proceedsofsale13301330Loanpayment0420Cashreceived1330910Dividendsreceived100100Interestpaid042ROI36.2%53.7%ConclusionTheuseofmarginmagnifiesnotonlythepotentialgainbutalsothepotentiallossMaintenanceMarginTheminimumequityrequiredforamarginposition.MaintenancemarginpurposeProtectthebrokerfromtheinvestor’sdefaulting;AMarginCallAMargincallArequestbyabrokerforaninvestortoplaceadditionalfundsorsecuritiesinanaccountascollateralagainstborrowedfundsorasagoodfaithdeposit.MarginTransactionsInitialmarginrequirementatleast50%.SetupbytheFed.MaintenancemarginRequirementproportionofequitytostockProtectsbrokerifstockpricedeclinesMinimumrequirementis25%MargincallonundermarginedaccounttomeetmarginrequirementIfmargincallnotmet,stockwillbesoldtopayofftheloanmaximumminimumAmargincallAdvanceadditionalfundsequitypositionMarginTransactionsChangesinpriceaffectinvestor’sequitypositionMarginTransactionsBuy200sharesat$50=$10,000positionBorrow50%,investmentof$5,000Ifpriceincreasesto$60,positionValueis$12,000Less-$5,000borrowedLeaves$7,000equityfora$7,000/$12,000=58%equitypositionMarginTransactionsBuy200sharesat$50=$10,000positionBorrow50%,investmentof$5,000Ifpricedecreasesto$40,positionValueis$8,000Less-$5,000borrowedLeaves$3,000equityfora$3,000/$8,000=37.5%equityposition

Margincallprice

Whenequityposition≤

MaintenanceMarginrequirement,theinvestorsreceivemargincallfromthebroker.Margincallprice=Equityposition=

minimumequityadded=maintenancemarginE.DeliveryofSecurities

takedelivery

leavethesecuritieswiththebrokerToregisteredinthebrokeragefirm’sname(inthestreetname)Receivethestockcertificatesorbonds5%95%F.CostofInvestingTaxes—securitiesdealingsTransferfees;othermiscellaneousfeesCommissionfees123Mostobviouscost;Canbenegotiable;Thesaleofborrowedsecuritiesinanticipationofapricedecline;Acontractforfuturedelivery;FShortsaleOtherexamplesMagazine—subscription;Professionals—lawyer,engineer,teacher…RationaleforshortsaleSellborrowedsecuritiesBuybacksecuritiesandreturntohisbrokerprofitsCharacteristicsAcurrentsalewithacontractforfuturedelivery;Processofshortsale:borrowedsecuritiesfirstthensellthem(shortsale)buybacksecuritiesandthenreturnthemExpectthedeclineofsecuritiespriceWhosesecuritiescanbelent?Ifinvestorsregisterhisorhersharesinacashaccount,thebrokeragefirmscannotlendthemtoshortsellers;Ifinvestorsregistertheirsharesinamarginaccount,onepartofthemarginagreementpermitsthebrokeragefirmstolendtheshares.ACoveringtheShortSale

空頭回補(bǔ)、平倉(cāng)Theproceedsofshortsalearenotremittedtosellersbutareheldbythebroker.Theproceedswillsubsequentlybeusedtorepurchasethestock.Suchrepurchasesarereferredtoacoveringtheshortsale.MarginrequirementClosingthePositionAftershort-sellersbuytheshares,thebrokeragefirmsgetthembackandclosethesellers’position.SellingpriceminuspurchasingpriceminusanyothercostsFigure1.1TheFlowofMoneyandCertificatesinaShortSalesellerTheflowofmoney:$5000proceedsfromthebuyer(tobroker);$3000marginfromtheshortseller(tobroker);Thecertificatesinashortsale:Shortsellerborrowed100sharesfrombroker;Shortsellersold100sharestothebuyer;Shortseller’saccount:shortthe100sharesFigure1.2TheFlowofMoneyandCertificatesWhenCoveringaProfitableShortSaleWhencoveringaprofitableshortsale:Shortsellersold100sharesat$5000Shortsellerbought100sharesat$4000Shortsellerreturned100sharestobrokerShortsellergot$1000netprofits;$3000margin

CoveringafailedshortsaleWhencoveringafailedshortsale:Shortsellersold100sharesat$5000Shortsellerbought100sharesat$6000Shortsellerreturned100sharestobroker;Shortsellergot$1000netlosses;$3000margin($2000back)Nakedshortselling---investorsdirectlysellstocksthattheydon’townorhold.---beforethematuritydate(valuedate;deliverydate),investorsjustgotothemarket,buystocksanddeliverthem;It’slegal

todonakedshortsellinginUSsecuritiesmarket,butit’sunlawful

touseittodepressstockprices.Muchtroublecausedbynakedshortselling:UnbelievableprofitsShortsellers(hedgefunds)targetsomeshareswithalotofrealorfalseunfavorableinformation;Nakedshortsellingoftheseshareswiththehelpofunfavorablenews;Buythematverycheapprice;CausefluctuationsinsecuritiesmarketExamples:LehmanBrothers1850-2008Stockpricecutdownfrommorethan$60atthebeginningof2008to$7.79beforeSeptember15,2008.Oneofreasons—nakedshortsellingTheUptickRule報(bào)升\提價(jià)規(guī)則

高于前成交價(jià)It’soneimportantconstraintonshortsale.Shortsellerscanexecuteshortsellingonlywhenthechangeinthepriceofthestockisanuptick.Ifthepriceofastockmovesupfromtheprevioustrade,thatisanuptick.Ifthepriceofthestockdeclinesfromtheprevioustrade,thatisadowntick.Section3ForeignSecuritiesForeignSecuritiesForeignstockstradedinAmericanmarketsAmericanDepositoryReceipts(ADRs)AvoidstheproblemoflanguageExpressedindollarsandnotlocalcurrencyMayo/BasicInvestments-Ch0382Section4

RegulationTheSecuritiesandExchangeCommission(SEC)FulldisclosureofinformationRegistration