The Secondary Market, Equity Trading, & Dispute Resolution Flashcards Preview

Series 7 Top-off Exam > The Secondary Market, Equity Trading, & Dispute Resolution > Flashcards

Flashcards in The Secondary Market, Equity Trading, & Dispute Resolution Deck (145)
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1

By what date are member firms required to send trade confirmations? 

Either on the day of or prior to trade settlement.

This includes trades that settle the same day (cash settlement.)

2

Within brokerage operations, what is the old name for the location where retail stock orders would be received? 

Wire room

From here, the operations group would transmit orders to the right markets. With electronic trading, this largely has been superceded. 

3

Within brokerage operations, what group calculates settlement dates, records all client transactions, and confirms statement printing? 

Purchase and sales department

4

What specialized part of a dealer operation handles all stock splits, redemptions, mergers, and tender offers? 

Re-org department

The reorganization department and clearing firms are the two elements of broker operations that technology hasn't made obsolete. 

5
Define:

Disclosure of Capacity

On every trade confirmation, the dealer has to indicate if he acted as an agent only, meaning he took the order from the customer, or as a principal, meaning he acted on behalf of a customer in a discretionary account. 

6

On what schedule are firms required to send customer statements?

At least quarterly if no trades have taken place, and monthly when there is trading activity. 

7

Who can request a firm's most recent balance sheet?

A financial condition disclosure can be requested by any customer of the firm or any other dealer who does business with the firm. 

8

Which member department handles all applications for credit

Margin department

9

Which department actually prints and mails the confirmation to the customer?

Purchase and sales

10

What is a reclamation

A reclamation occurs if a dealer accepts a delivery as good, only later to find out it was a bad delivery. In this situation the securities can be sent back to the selling broker-dealer in order to fix the issue.
 

11

What type of open orders will be reduced on the morning of the ex-dividend date? 

Buy Limits, Sell Stops, and Sell Stop Limits

All orders that are entered at or below the market are adjusted downwards on the morning of the ex-dividend date.

12

Regular way settlement for corporate bonds

T + 2

13

Regular way settlement for municipal bonds

T + 2

14

Regular way settlement for agency securities

T + 2

15

Regular way settlement for equities

T + 2

16

Regular way settlement for Treasuries

T + 1

17

Regular way settlement for listed option contracts

T + 1

18

When a written trade confirmation must be given or sent to a customer

At or before the completion of the transaction (settlement)

19

The capacity shown on a confirmation when the shares are sold from the inventory of the broker-dealer

Principal

20

The capacity shown on a confirmation when the broker has arranged a trade between a buyer and seller

Agent

21

Compensation charged when a dealer sells shares from inventory

Mark-up

22

Compensation charged when a dealer purchases shares for inventory

Mark-down

23

Compensation charged when a broker transacts an order on a client's behalf

Commission

24

Standard trading unit of equity securities

Round lot (100 shares)

25

Securities that have met the minimum requirements to trade on an exchange

Listed securities

26

Responsible for maintaining an orderly market in the stocks for which he is responsible on the NYSE floor. Also referred to as the specialist.

Designated Market Maker

27

Order that is executed immediately at the current price, and has priority over all other orders

Market order

28

An order that is entered to protect a profit or prevent a loss

Stop order

29

Can be executed only at the specified price or better

Limit order

30

Regulates short-selling of equity securities; mandates a locate requirement

Regulation SHO