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S

Investment and Trading 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

S&P 100

Standard & Poor´s 100 Stock Index.

S&P 500

Standard & Poor´s Composite Index of 500 Stocks.

SALE

See sell.

SCALPER

A commodities trader who buys and sells many commodities contracts during a single day in the anticipation of profiting from small price fluctuations. Scalpers rarely carry positions from one day to the next, and their buying and selling activity contributes greatly o the liquidity of the commodities markets.

See also Day Trader; Position Trader; Spreader.

SEC

See Securities and Exchange Commission.

SECONDARY MARKET

The market in which securities are bought and sold subsequent to their being sold to the public for the first time.

SECONDARY OFFERING

A sale of securities in which one or more major stockholders in a company sell all or a large portion of their holdings; the underwriting proceeds are paid to the stockholders rather than to the corporation. Typically such an offering occurs when the founder of a business (and perhaps some of the original financial backers) determine there is more to be gained by going public than by staying private. The offering does not increase the number of shares of stock outstanding.

SECURITIES ACT OF 1933

Federal legislation requiring the full and fair disclosure of all material information about the issuance of new securities.

Syn. act of 1933; Full Disclosure Act; New Issues Act; Prospectus Act; Trust in Securities Act; Truth in Securities Act.

SECURITIES  AND EXCHANGE COMMISSION (SEC)

Commission created by Congress to regulate the securities markets and protect investors. It is composed of five commissioners appointed by the president of the United States and approved by the Senate. The SEC enforces, among other acts, the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940 and the Investment Advisers Act of 1940.

SEGURITIES EXCHANGE ACT OF 1934

Federal legislation that established the Securities and Exchange Commission. The act aims to protect investors by regulating the exchanges, over-the-counter market, extension of credit by the Federal reserve Board, broker-dealer, insider transactions, trading activities, client accounts and net capital.

Syn.act of 1934; Exchange Act.

SECURITIES INFORMATION CENTER (SIC)

The organization designated by the SEC to act as a central data bank for records of lost and stolen securities.

SECURITIES INVESTOR PROTECTION CORPORATION (SIPC)

A nonprofit membership corporation created by an act of Congress to protect clients of brokerage firms that are forced into bankruptcy. Membership is composed of all brokers and dealers registered under the Securities Exchanges Act of 1934, all members of national securities exchanges and most NASD members. SIPC provides customers of these firms up to $500,000 coverage for cash and securities held by the firms (although coverage of cash is limited to $250,000).

SECURITY

Any piece of securitized paper that can be traded for value other than an insurance policy or a fixed annuity. Under the act of 1934, this included any note, stock, bond, investment contract, debenture, certificate of interest in profit-sharing or partnership agreement, certificate of deposit, collateral trust certificate, preorganization certificate, option on a security, or other instrument of investment commonly known as a security.

Also categorized as securities are interests in oil and gas drilling program, real state condominiums and cooperatives, farmland or animals, commodity option contracts, whiskey warehouse receipts, multilevel distributorship arrangements, and merchandising marketing programs.

The Federal courts have established that, if a person invests money in a common enterprise and is led to expect profits from the managerial efforts of the promoter or a third party, the investment is a security.

SELF-REGULATORY ORGANIZATION (SRO)

One of eight organizations accountable to the SEC for the enforcement of federal securities laws and the supervision of securities practices within an assigned field of jurisdiction. For example, the National Association of Securities Dealers regulates the over-the-counter market. The Municipal Securities Rulemaking Board supervises state and municipal securities and certain exchanges, such as the New York Stock Exchange and the Chicago Board Options Exchange, act as self-regulatory bodies to promote ethical conduct and standard trading practices.

SELL

To convey ownership of a security or other asset for money or value. This includes giving or delivering a security with or as a bonus for a purchase of securities, a gift of assessable stock, and selling or offering a warrant or right to purchase or subscribe to another security. Not included in the definition is a bona fide pledge or loan, or a stock dividend if nothing of value is given by the stockholders for the dividend.

Syn. Sale.

SELLING A HEDGE

Selling futures options as protection against a future decrease in commodities prices.

See also buying a hedge; hedge; long hedge; short hedge.

SELLING GROUP

Brokerage firms that help distribute securities in an offering but that are not members of the syndicate.

SELL STOP ORDER

An order to sell a security that is entered at a price below the current market price and that is triggered when the market price touches or goes through the sell stop price.

SERIES 7

The General Securities Registered Representative License, which entitles the holder to sell all types of securities products with the exception of commodities futures (which requires a Series 3 license). The Series 7 is the most comprehensive of the NASD representative licenses, and serves as a prerequisite for most of the NASD´s principals examinations.

SERIES 8

The General Securities Sales Supervisor Limited Principal License, which entitles the holder to supervise the sale of all types of securities products except commodities.

SERIES 24

The General Securities Principal License, which entitles the holder to supervise the business of a broker-dealer. A Series 7 or a Series 62 qualification in a prerequisite for this license.

SETTLEMENT

The completion of a trade through the delivery of a security or commodity and the payment of cash or other consideration.

SETTLEMENT DATE

The date on which ownership changes between buyer and seller. Settlement provisions are standardized by the NASD´s Uniform Practice Code.

See also cash transaction; regular way.

SHARE IDENTIFICATION

An accounting method that identifies the specific shares selected for liquidation in the event that an investor wishes to liquidate shares. The difference between the buying and selling price determines the investor´s tax liability.

See also average basis; first in, first out; last in, first out.

SHORT

The term used to describe the selling of a security, contract or commodity not owned by the seller. For example, an investor who borrows shares of stock from a broker-dealer and sells them on the open market is said to have a short position in the stock.

See also long; short against the box.

SHORT AGAINST THE BOX

The term used to describe the selling of security, contract or commodity that the seller owns but prefers not to deliver; frequently this is done to defer taxation.

SHORT HEDGE

Selling options or futures as protection against a decrease in the value of a long securities position.

See also buying a hedge; hedge; long hedge; selling a hedge.

SHORT SALE

The sale of a security that the seller does not own, or any sale consummated by the delivery of a security borrowed by or for the account of the seller.

See also plus tick rule.

SINGLE ACCOUNT

An account in which only one individual has control over the investments and may transact business.

SIPC

Securities Investor Protection Corporation.

SOLE PROPRIETORSHIP

A form of business organization in which a single owner has total control over the business, make all managerial decisions and is personally liable for all debts of the business.

Syn. proprietorship

SOLVENCY

The ability of all debts of a corporation both to meet its long-term fixed expenses and to have adequate money for long-term expansion and growth.

SPECIALIST

A stock exchange member who stands ready to quote and trade certain securities either for his own account or for customer accounts. The specialist´s role is to maintain a fair and orderly market in the stocks for which he is responsible.

SPECULATION

Trading a commodity or security with a higher that average risk in return for a higher that average profit potential. The trade is effected solely for the purpose of profiting from it and not as a means of hedging or protecting other positions.

SPECULATOR

One who trades a commodity or security with a higher than average risk in return of a higher than average profit potential.

See also speculation.

SPREAD

1.  In a quotation, the difference between the bid and the ask prices of a security.

2.  An options position established by purchasing one option and selling another option of the same class but of a different series.

SPREADER

A commodities trader who attempts to profit from a change in price differences between commodities, futures contracts or options contract; a commodities arbitrageur.

See also day trader; position trader; scalper.

SRO

See self-regulatory organization.

STAGFLATION

A period of high unemployment in the economy accompanied by a general rise in price.

See also deflation; inflation.

STANDARD & POOR´S CORPORATION (S&P)

A company that rates stocks and corporate and municipal bonds according to risk profiles and that produces and tracks the S&P indexes. The company also publishes a variety of financial and investment reports.

 See also bond rating; Moddy´s Investor Service; Standard & Poor´s 100 Stock Index;  Standard & Poor´s Composite Index of 500 Stocks.

STANDARD & POOR´S 100 STOCK INDEX (S&P 100)

A value weighted index composed of 100 blue chip stocks. The index is owned and compiled by Standard & Poor´s Corporation.

See also index.

STANDARD & POOR´S COMPOSITE INDEX OF 500 STOCKS (S&P 500)

A value weighted index that offers broad coverage of the securities market. It is composed of 400 industrial stocks, 40 financial stocks, 40 public utility stocks and 20 transportations stocks. The index is owned and compiled by Standard & Poor´s Corporation.

See also index; Standard & Poor´s Corporation; Standard & Poor´s 100 Index.

STOCKBROKER

See registered representative.

STOCK CERTIFICATE

Written evidence of ownership in a corporation.

STOCK SPLIT

An increase in the number of a corporation´s outstanding shares that decreases the par value of its stock. The market value of the total number of shares remains the same. The proportional reductions in orders held on the books for a split stock are calculated by dividing the market price of the stock by the fraction that represents the split.

See also reverse split.

STOP LIMIT ORDER

A customer order that becomes a limit order when the market price of the security reaches or passes a specific price.

See also limit order; stop order.

STOP ORDER

(1) A directive from the SEC that suspends the sale of new issue securities to the public when fraud is suspected or filing materials are deficient.

(2) A customer order that becomes a market order when the market price of the security reaches or passes a specific price.

See also limit order; market order; stop limit order.

STREET NAME

See in-street-name account.

SUITABILITY

A determination made by a registered representative as to whether a particular security matches a customer´s objectives and financial capability. The RR must have enough information about each customer in order to make this judgment.

SUPPORT LEVEL

A technical analysis term describing the bottom of a stock´s historical trading range.

See also breakout; resistance level.

SYMMETRICAL TRIANGLE

On a technical analyst´s trading activity chart, a pattern which indicates that the market is consolidating for the time being; considered to be a neutral indicator.

See also ascending triangle; descending triangle.

SYNDICATE

A group of investment bankers formed to handle the distribution and sale of a security on behalf of the sale and distribution of a portion of the issue.

SYSTEMATIC RISK

The potential for a security to decrease in value owing to its inherent tendency to move together with all securities of the same type. Neither diversification not any other investment strategy can eliminate this risk.

See also market risk; nonsystematic risk.