CAIA Chapter 2 The Environment of Alternative Investments

allows an investment manager to carry out trades in multiple financial instruments at multiple broker dealers while keeping all cash and securities at a single firm.

offering documents, which are fromal descriptions of an investment opportunity that comply with federal securites regulation

which is a formal written contract creating a partnerhsip

which is an spplication submitted by an investor who desires to join a limited partnership

which is an agreement between members related to a limited liability company and the conduct of its business related to law

many hedge funds and other alternative investment funds now engage a fund administrator to be responsible for bookkeeping, third-party information gathering, and securities valuation functions

are systems that provide access to financial markets, portfolio management systems, accounting and reporting systems and risk management systems

may consist of prepackaged software programs and computer language

supply funds primarily with raw data, including security prices, trading information and indices.

are responsible for holding their clients' cash and securities and settling clients' trades, both of which maintain the integrity of clients' assets while ensuring that trades are settled quickly.

which means that a bank can engage in both commercial and investment banking

refers to the methods, instituions, and mechanisms involved in the placement of new securities to investors

facilitates trading among investors of previously existing securites.

is excessive trading for the purpose of generating commissions

are generally smaller and follow a pattern of price setting, a period of negotiations and negotiated price setting and a set perid of trading

allows continuous trading as long as the market is open

the price difference between the highest bid price (the best bid price) and the lowest offer (the best ask price)

is a practice whereby an investment bank or other market participant deals securities by regularly offering to buy securites and sell securities

market participants that which to have transactions executed without delay place market orders that cause immediate execution at the best available prices

participants that place market orders are market takes, they buy at the ask price and sett at the bid prices

are regional exchanges where stocks listed in primary secondary makerts can also be traded

are electronic communications systems offered by these markets

is the potential for economy-wide losses attributable to failures or concerns over potential failures in financial markets, financial institutions, or major participants

Hedge funds and other alternative investment pools typically avoid registraion through exemption including Section 3(c)1 of the Company Act that limits the number of purchasers to 100 benef. owners & Section 3(c)7 that waives registration if >500 investor

generally refer to an agreement or understanding by whcih an investment adviser receives reserach services for a broker-dealer in exchange for a fee (such as a commission) paid out of the fund or client account.

Federal reserve leverage rules include the Regulation T margin rule that currently requires a deposit of at least 50% of the purchase cost of short sale proceeds of a trade (margin)

The regulatory requirements for a UCITS include meeting minimum size requirements (NVA) based on the fund's age being authorized by the CFFS

Markets in Financial Instruments Directive in the EU law that establishes uniform regulation for investment managers in the European Economic Area. The MiFID is one of the primary pieces of European legislation dealing with regulation of investment servi

refers to nonexchange trading by large market participants that is hidden from the view of most market participants