Capital markets look like a list of institutions and acronyms. They are better read as one question asked repeatedly: who is on the other side of this trade, and what are they obliged to do? That question orders the whole subject — a regulator writes the obligation, a registration statement discloses it, an exemption removes it, a market structure enforces it at the moment of execution. This guide is written from the statutes, regulations and regulator publications themselves. It is orientation for study, not investment advice, and it is not affiliated with any exam body.
Each chapter opens with the short version. Tap one to read the detail.
Who regulates whom, and why capacity decides everything
~2 min
The Securities Exchange Act of 1934 built the system: it creates the Commission, and it makes exchanges, the securities association and clearing agencies self-regulatory organizations that must file rule changes for approval. Broker and dealer are two capacities, not two firms, and the difference is whose account the trade is for.
Registration is a clock, not a stamp
~2 min
Registration is a timed process with three phases and different permissions in each. A preliminary prospectus may circulate before the effective date; the final price is not in it. Effectiveness can be accelerated on request, and a shelf registration lets an already-registered issuer sell later, on its own timing.
Exempt securities and exempt transactions are different escapes
~2 min
Registration can be avoided two ways: the security itself is exempt, or the transaction is. Regulation D's private-placement exemptions turn on whether the issuer advertises: general solicitation is permitted only in the variant that requires verifying accredited status. Regulation A splits into two tiers by offering size.
Market structure is a set of promises enforced at execution
~2 min
Regulation NMS makes the best displayed prices protected: a trading center must prevent trade-throughs, which are purchases below a protected bid or sales above a protected offer. Regulation SHO requires a locate before a short sale and forces close-outs of persistent fails. Alternative trading systems are venues that perform exchange functions without being exchanges.
Two levers, two owners, and the numbers that describe the cycle
~2 min
Monetary policy belongs to the Federal Reserve and fiscal policy to Congress, and mixing them up is the classic error. The Federal Open Market Committee sets policy with twelve voting members, and implementation now runs through administered rates rather than scarce reserves.
A market organised around one disclosure document
~2 min
Municipal rules are written by a board that does not examine firms itself, and they are grouped by function: administrative, definitional and general. The official statement is the disclosure document, defined as complete when delivered to the underwriters. A municipal advisor owes the issuer a fiduciary duty, which is why it cannot also underwrite the deal.
Three statements, three questions, and the ratios that connect them
~2 min
The balance sheet is a snapshot at a moment, the income statement covers a period, and the cash flow statement explains whether cash actually arrived. Profit and cash are different: a company can report earnings and still run short of cash. Ratios are calculated from the statements, never printed on them.
Allocation, diversification and the discipline of putting it back
~2 min
Asset allocation divides a portfolio among categories; diversification spreads money within and across them to reduce risk. The mix follows time horizon and risk tolerance, not a view about markets. Rebalancing returns a drifted portfolio to its intended mix, and it means selling what has done well.
Written by Keentune. We are not affiliated with or endorsed by the organizations whose documentation informs this guide, and any linked sources belong to their respective owners.
All exam, test, and product names and trademarks are the property of their respective owners and are used here for identification and reference only. Keentune is independent study practice — not affiliated with, authorized, or endorsed by any of these organizations.