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Securities Exchange Act

Securities Exchange Act of 1934
Great Seal of the United States
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.
Nicknames Securities Exchange Act
Exchange Act
1934 Act
'34 Act
Enacted by the 73rd United States Congress
Citations
Public law Pub.L. 73–291
Statutes at Large 48 Stat. 881
Codification
U.S.C. sections created 15 U.S.C. § 78a et seq.
Legislative history
Major amendments
Dodd–Frank Wall Street Reform and Consumer Protection Act

The Securities Exchange Act of 1934 (also called the Exchange Act, '34 Act, or 1934 Act) (Pub.L. 73–291, 48 Stat. 881, enacted June 6, 1934, codified at 15 U.S.C. § 78a et seq.) is a law governing the secondary trading of securities (, bonds, and debentures) in the United States of America. A landmark of wide-ranging legislation, the Act of '34 and related statutes form the basis of regulation of the financial markets and their participants in the United States. The 1934 Act also established the Securities and Exchange Commission (SEC), 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 1933, which regulates these original issues, the Securities Exchange Act of 1934 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 , the , and regional exchanges like the , and .

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.


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Wikipedia

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