The trading of securities in the secondary market is regulated by the:

Prepare for the Canon Financial Institute CFIRS Exam with flashcards and multiple choice questions. Each question comes with hints and explanations for better understanding. Get ready to excel in your exam!

The correct answer is the Securities Exchange Act of 1934, which is foundational in regulating the trading of securities in the secondary market. This act was established to promote fair trading practices and to restore investor confidence in the financial markets following the stock market crash of 1929. It created the Securities and Exchange Commission (SEC), granting it the authority to oversee and enforce securities laws, including those that govern the trading of securities that occur after their initial issuance, which characterizes the secondary market.

The Act establishes rules against fraudulent practices and requires ongoing disclosure of financial information by public companies, ensuring transparency and fairness in trading activities. This regulatory framework is essential for protecting investors and maintaining the integrity of the financial markets. In contrast, while the Glass-Steagall Act and the Securities Act of 1933 play important roles in financial regulation and the issuance of securities, they do not specifically focus on the secondary trading aspect, which is the primary concern of the 1934 Act. The Securities Advisors Act of 1940 deals primarily with the regulation of investment advisors, making it less relevant to the trading of securities in the secondary market.

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