Secondary Markets Flashcards
(24 cards)
What are the four secondary markets called?
The exchanges
The OTC (over the counter)
Third Market (nasdaq inter market)
Fourth Market (ECNs)
What does ECNs stand for?
Electronic communication networks
What does a DMM do?
Acts as a dealer on the floor for a specific security and maintains a fair and orderly market by keeping an inventory and guarantees liquidity.
What is a floor broker
An employee for their firm and their firms clients
What does a floor broker do?
Handles trades that execute exchanges for their firm(s clients)
What is a two dollar broker
Broker who assists overwhelmed floor brokers in trades for a fee
What is a floor trader
Members who execute trades on the floor for their firms accounts
Who do exchange market trades happen between?
It happens only between members. Employees can support the exchange, but are not involved in trading.
Who participates in trades in the exchange market
DMMs, floor brokers, floor traders, and two dollar brokers
What is the OTC
What does the OTC do?
Over the counter market
Trades unlisted stocks and most bonds
Market maker definition
A dealer willing to accept the risk holding a security in their account to facilitate trades.
What is the Nasdaq Intermarket?
A market in which exchange listed securities are traded within the OTC
Who trades in the third market?
Broker dealers registered as OTC market makers
What securities are eligible for OTC trading?
All securities on the NYSE and most listed on the regional exchanges.
When are regional exchanges eligible for OTC trading?
Only when trades are reported to the consolidated tape within 10 seconds of execution.
Who uses the fourth market?
Institutional investors, no BD assistance
What trades take place on the fourth market?
Large blocks of stock (listed and unlisted)
What are the market hours?
9:30-4
What is the after hours market?
A market makers market that remains open until 6:30 and has much less liquidity due to limited order flow.
What are some examples of an institutional investor?
Banks, mutual funds, pension funds, an insurance company, or some other financial service organizations.
What is a custodian?
A person/firm who manages a minors accounts under UGMA or UTMA
What is a trustee?
A fiduciary that oversees a trust.
What is a prime account?
An account that allows a customer (normally an institution) to select a prime broker to provide custody and other services.
What is an executing broker?
Firms called on to handle certain trades placed by a customer with a prime account.
