Chapter 1 The Securities Industry1

1.01 The securities industry plays an important role in the growth of global business by providing accessible markets for initial and secondary offerings, as well as subsequent purchases and sales of securities. Investments have broadened public access to securities investing and enhanced the diversity of financial products. Through efficient financial markets, the industry makes it possible for business entities and governmental agencies that need to raise capital to connect with investors who have funds to invest.

1.02 The securities industry has accomplished its role through a variety of financial products, services, and institutions. Capital formation is achieved through public offerings, private placements, asset securitization, and merchant banking activities. Efficient secondary markets are maintained when securities firms act as agents for customers' securities transactions, trading, and arbitrage activities through a broker and dealer's (broker-dealer's) own accounts, market-making, and designated market maker (formerly known as specialist) activities. The securities industry also aids the risk mitigation process through a variety of transactions, products (such as futures, forwards, swaps, and options), and techniques.

1.03 Many different institutions facilitate the processing of the products and providing of services. The following are some of the key types of institutions the securities industry comprises:

     Broker-dealers ...

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