1.1 US Stock Market Jargon and History explained: Start Here
Who does what in the US market — the Treasury, the Fed, the SEC, the exchanges — told through the problems each was built to solve.
About this lecture
The Fed, the Treasury, the SEC, Nasdaq—who does what in the US stock market, and why do these names keep appearing in financial news?
In this lecture, Pratham uses the history of the American market to explain its institutions. Instead of memorising acronyms, follow the problems that led to each part of the system.
You'll learn about:
- Government bonds, the Treasury and the origins of the NYSE
- Bank runs, the Federal Reserve and the FOMC
- The roles of the SEC, CFTC and FINRA
- Economic data from the BLS, BEA and Census Bureau
- The Dow, S&P 500, Nasdaq 100, Russell 2000 and VIX
- Exchanges, market makers and the National Best Bid and Offer (NBBO)
We bring these names together into a practical map: who borrows, who sets the price of money, who enforces the rules, who counts, and who facilitates trading.
Educational content only. Not investment advice.
MochaLearn is a free A to Z course on understanding and trading US stocks and commodities, built for Indian traders.
Key takeaways
- Each institution answers a problem the market once had: the Treasury borrows, the Fed sets the price of money, the SEC, CFTC and FINRA enforce the rules, the BLS, BEA and Census Bureau count, and the exchanges and market makers facilitate trading.
- The NYSE grew out of trading in government bonds; the Federal Reserve and the FOMC grew out of bank runs.
- The Dow, the S&P 500, the Nasdaq 100, the Russell 2000 and the VIX each measure a different slice of the market.
- The NBBO is the best bid and the best offer across every exchange, consolidated into one quote.
Terms in this lecture
- Dow Jones Industrial AverageThe Dow Jones Industrial Average is thirty large American companies averaged by share price, not by size, since 1896.…
- 10-K and 10-QA 10-K is the audited annual report a US listed company files with the SEC; a 10-Q is the unaudited quarterly version.…
- Bid-ask spreadThe bid-ask spread is the gap between the best price to sell (bid) and the best price to buy (ask). Buy at the ask…
- Blue chip US stocksBlue chip US stocks are large, long-established, profitable American companies like Apple, JPMorgan or Johnson &…
- CboeCboe is the Chicago-based exchange group that runs the largest US options market and four US stock exchanges grown out…
- CFTCThe CFTC is the Commodity Futures Trading Commission, the US referee for futures, swaps and anything shaped like a…
- CME GroupCME Group is the Chicago exchange where futures on US stock indices, interest rates, gold, oil and copper trade…
- Commitments of Traders (COT) reportThe Commitments of Traders report is the CFTC's weekly breakdown of who holds US futures: producers, dealers, hedge…
- Dark poolA dark pool is a private trading venue where orders stay hidden until they fill, so a fund can move a large block…
- Day trading and the PDT ruleDay trading is opening and closing a position in the same session. The PDT rule is FINRA's pattern day trader rule: a…
- Debt ceilingThe debt ceiling is the cap Congress sets on total US government borrowing. The Treasury borrows the gap between…
- Designated market makerA designated market maker is the one firm the NYSE assigns to each listed stock to keep trading orderly and to run its…
- Federal ReserveThe Federal Reserve is the US central bank, built in 1913 after the 1907 bank runs were stopped by one banker. It sets…
- FINRAFINRA is the Financial Industry Regulatory Authority, US brokers policing themselves under the SEC. It writes broker…
- GDPGDP is the total value of goods and services an economy produces. The BEA publishes US GDP quarterly, first as an…
- Index futures (E-mini S&P 500)Index futures are futures on a stock index, like the E-mini S&P 500 on the CME. They trade almost round the clock, so…
- Market breadthMarket breadth is how many stocks are taking part in a move: advancers against decliners, new highs against new lows…
- Market cap categories (mega/large/mid/small)Market cap categories group US companies by size: mega above $200 billion, large $10 to $200 billion, mid $2 to $10…
- Market capitalizationMarket capitalization is share price times shares outstanding, the market's price for the whole company. Index weights…
- Market makerA market maker quotes a price to buy and a slightly higher price to sell all day and earns the spread. Since US prices…