The Securities Exchange Act of also called the Exchange Act , ' 34 Act , or Act Pub. The Act also established the Securities and Exchange Commission SEC , [2] the agency primarily responsible for enforcement of United States federal securities law. Companies raise billions of dollars by issuing securities in what is known as the primary market.

Contrasted with the Securities Act of , which regulates these original issues, the Securities Exchange Act of regulates the secondary trading of those securities between persons often unrelated to the issuer, frequently through brokers or dealers. Trillions of dollars are made and lost each year through trading in the secondary market. One area subject to the '34 Act's regulation is the physical place where securities stocks, bonds, notes of debenture are exchanged.

Here, agents of the exchange, or specialists , act as middlemen for the competing interests in the buying and selling of securities. An important function of the specialist is to inject liquidity and price continuity into the market. Some of the more well known exchanges include the New York Stock Exchange , the American Stock Exchange , and regional exchanges like the Cincinnati Stock Exchange , Philadelphia Stock Exchange and Pacific Stock Exchange. The '34 Act also regulates broker-dealers without a status for trading securities.

A telecommunications infrastructure has developed to provide for trading without a physical location. Previously these brokers would find stock prices through newspaper printings and conduct trades verbally by telephone.

Today, a digital information network connects these brokers. This system is called NASDAQ , standing for the National Association of Securities Dealers Automated Quotation System. In the Exchange Act was amended by the Maloney Act , which authorized the formation and registration of national securities associations, which would supervise the conduct of their members subject to the oversight of the SEC. That amendment led to the creation of the National Association of Securities Dealers, Inc.

Series I Savings Bonds vs the stock market: US Savings Bonds

The NASD had primary responsibility for oversight of brokers and brokerage firms, and later, the NASDAQ stock market. In the SEC criticized the NASD for putting its interests as the operator of Nasdaq ahead of its responsibilities as the regulator, and the organization was split in two, one entity regulating the brokers and firms, the other regulating the NASDAQ market.

In the NASD merged with the NYSE which had already taken over the AMEX and the Financial Industry Regulatory Authority FINRA was created. In the last 30 years, brokers have created two additional systems for trading securities. The alternative trading system, or ATS, is a quasi exchange where stocks are commonly purchased and sold through a smaller, private network of brokers, dealers, and other market participants.

The ATS is distinguished from exchanges and associations in that the volumes for ATS trades are comparatively low, and the trades tend to be controlled by a small number of brokers or dealers. ATS acts as a niche market, a private pool of liquidity. Reg ATS , an SEC regulation issued in the late s, requires these small markets to 1 register as a broker with the NASD, 2 register as an exchange, or 3 operate as an unregulated ATS, staying under low trading caps.

A specialized form of ATS, the Electronic Communications Network or ECN , has been described as the "black box" of securities trading. The ECN is a completely automated network, anonymously matching buy and sell orders. Many traders use one or more trading mechanisms the exchanges, NASDAQ, and an ECN or ATS to effect large buy or sell orders — conscious of the fact that overreliance on one market for a large trade is likely to unfavorably alter the trading price of the target security.

While the '33 Act recognizes that timely information about the issuer is vital to effective pricing of securities, the '33 Act's disclosure requirement the registration statement and prospectus is a one-time affair. The '34 Act extends this requirement to securities traded in the secondary market.

The Stock Market Crash of

The filed reports are available to the public via EDGAR. If something material happens with the company change of CEO, change of auditing firm, destruction of a significant number of company assets , the SEC requires that the company issue within 4 business days an 8-K filing that reflects these changed conditions see Regulation FD.

With these regularly required filings, buyers are better able to assess the worth of the company, and buy and sell the stock according to that information.

While the '33 Act contains an antifraud provision Section 17 , when the '34 Act was enacted, questions remained about the reach of that antifraud provision and whether a private right of action—that is, the right of an individual private citizen to sue an issuer of stock or related market actor, as opposed to government suits—existed for purchasers. As it developed, section 10 b of the Act and corresponding SEC Rule 10b-5 have sweeping antifraud language.

Section 10 b of the Act as amended provides in pertinent part:. Section 10 b is codified at 15 U. The breadth and utility of section 10 b and Rule 10b-5 in the pursuit of securities litigation are significant. Rule 10b-5 has been employed to cover insider trading cases, but has also been used against companies for price fixing artificially inflating or depressing stock prices through stock manipulation , bogus company sales to increase stock price, and even a company's failure to communicate relevant information to investors.

Many plaintiffs in the securities litigation field plead violations of section 10 b and Rule 10b-5 as a "catch-all" allegation, in addition to violations of the more specific antifraud provisions in the '34 Act. Section 13 b 3 A of the Securities Exchange Act of provides that "with respect to matters concerning the national security of the United States," the President or the head of an Executive Branch agency may exempt companies from certain critical legal obligations.

These obligations include keeping accurate "books, records, and accounts" and maintaining "a system of internal accounting controls sufficient" to ensure the propriety of financial transactions and the preparation of financial statements in compliance with "generally accepted accounting principles.

On May 5, , in a notice in the Federal Register , President Bush delegated authority under this section to John Negroponte , the Director of National Intelligence. Administration officials told Business Week that they believe this is the first time a President has ever delegated the authority to someone outside the Oval Office. The Small Cap Liquidity Reform Act of H.

From Wikipedia, the free encyclopedia. Securities Exchange Act of Long title An act To provide for the regulation of securities exchanges and of over-the-counter markets operating in interstate and foreign commerce and through the mails, to prevent inequitable and unfair practices on such exchanges and markets, and for other purposes. Legislative history Signed into law by President Franklin D.

Roosevelt on June 6, Securities regulation in the United States Commodity Futures Trading Commission Securities Commission Chicago Stock Exchange Financial regulation List of financial regulatory authorities by country NASDAQ New York Stock Exchange Stock exchange Regulation D SEC Related legislation — Securities Act of — Temporary National Economic Committee establishment — Trust Indenture Act of — Investment Advisers Act of — Investment Company Act of — Williams Act Securities Disclosure Act — Securities Acts Amendments of — Garn—St.

Germain Depository Institutions Act — Gramm-Leach-Bliley Act — Commodity Futures Modernization Act of — Sarbanes—Oxley Act — Credit Rating Agency Reform Act of — Dodd—Frank Wall Street Reform and Consumer Protection Act. Hillman, and Donald C. Cases and Materials 6th ed. Archived from the original on May 25, Retrieved October 9, Retrieved February 10, Choose to Increase the Spread".

Archived from the original on February 24, House Majority Leader's Office. Archived from the original PDF on February 22, Retrieved from " https: United States federal criminal legislation U.

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Privacy policy About Wikipedia Disclaimers Contact Wikipedia Developers Cookie statement Mobile view. An act To provide for the regulation of securities exchanges and of over-the-counter markets operating in interstate and foreign commerce and through the mails, to prevent inequitable and unfair practices on such exchanges and markets, and for other purposes. Securities Exchange Act Exchange Act Act '34 Act.

Signed into law by President Franklin D. Dodd—Frank Wall Street Reform and Consumer Protection Act.