Unit 8- Trading Securities Flashcards by talia bennick

OTC Market

inter-dealer market in which unlisted securities trade

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Second Market

OTC Market

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Third Market

Nasdaq Intermarket, in which exchange listed securities are traded in the OTC market by market makers

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Fourth Market

for institutional investors to trade large blocks of stock

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ATS (Alternative Trading Systems)

alternative trading systems used for dark pools

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FINRA TRF

Trade Reporting Facility is an automated trade reporting and reconciliation service operated by ACT

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CHB (Commision House Broker)

floor brokers

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Two Dollar Brokers

when CHB too busy, go to two-dollar brokers who charge commisions

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Registered Trader

trade primarily for their own accounts and registered with SEC

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DMM (Designated Market Maker)

facilitate trading in specific stocks

FCTN: maintain a fair and orderly market

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Level 1 Halt

What % drop? How long of a halt?

7%
15 minutes (before 3:25), no halt (after 3:25)

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Level 2 Halt

What % drop? How long of a halt?

13%
15 minutes (before 3:25), no halt (after 3:25)

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Level 3 Halt

What % drop? How long of a halt?

20%

The rest of the day

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SLP (Supplemental Liquidity Provider)

off-floor market maker operates and competes wtih DMM.

- Must maintain bid or offer in an assigned block for at least 5% of trading day

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Crossing Orders

one order to buy 1,000 and one order to sell 1,000

DMM may use these orders to fulfill one another if a bid for $.01 higher is rejected by the trading crowdf

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Market Order

executed immediately at the market price

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Limit Order

limits the amount paid and received for securities

Priority is based on first orders submitted (time)

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Stop Order (also Stop Loss Order)

If the stock reaches the stop price (trigger price), the order goes through

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Stop Limit Order

If the stock reaches the stop price, the stop order changes into a limit order

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Benefits of buying a stop order

protects a profit/limits a loss in a short position

Benefits of SELLING a stop order

protects profits/limits loss in a long position

Day Orders

only valid for that trading day

Good-Till-Canceled Orders (GTC)

valid until executed or canceled

At-the-Open / Market-On-Close Orders

executed at the opening or close of market

NH (Not Held) Orders

customer agrees not to hold the broker to a particular time and price of execution. *Can only be DAY ORDERS

Fill or Kill Order (FOK)

fill the order completely or kill it

IOC- Immediate or Cancel Order

immediate fill the order, partially fill is fine, and then cancel the rest of the order

All-or-None (AON) Orders

Executed in their entirety or not at all, but they can be Day Orders OR GTC orders

Alternative Orders (OCO)

Place two orders for two scenarios. If one order is executed, the other is canceled.

Do Not Ship (DNS) Orders

limit order to buy or sell that can be executed by the NYSE only

Regulation SHO

Short Sales may now occur at any time during trading day. | Locate Requirement: must locate the securities for borrowing to ensure delivery

Super Display Book (SDBK)

- Nearly 75% of orders are processed through here Broker/Dealers use this computerized order routing system to route an order directly to the appropriate equity post on the trading floor

CTS (Consolidated Tape System)

receives, validates, and sequences the last sale price and size of all equity transactions

DIGITS & VOL DELETED (TAPE MESSAGE)

first digit of price and volume will be dropped

REPEAT PRICES OMITTED (TAPE MESSAGE)

only show price of transactions that differ in previous report

SLD (TAPE MESSAGE

did not report a sale on time

HALT

trading in a security is halted

Who is the OTC regulated by?

FINRA & SEC

OATS (Order Audit Trail System)

tracks orders, quotes and other trade info

Backing Away

refusing to do business at quoted price is VIOLATION

Workout Quote

aproximate figure, often used with block positions

Nominal Quote

someones assessment of an inactively traded security- not a firm quote

In order to charge markups and markdowns, the market maker must be acting as PRINCIPAL/AGENT?

PRINCIPAL- dealing with inventory that holds financial risk

NASDAQ Quote Service: Level 1

ONLY INSIDE QUOTE (eg. DWAQ 35 - 35.13) - not guaranteed

NASDAQ Quote Service: Level 2

INSIDE QUOTE & QUOTES from market makers (guaranteed for at least 100 shares)

NASDAQ Quote Service: Level 3

INSIDE QUOTE & Market Maker Quote & ABILITY TO UPDATE THEIR OWN QUOTES ON SECURITIES WHICH THEY MAKE MARKETS FOR

How long after a market maker makes a trade does he/she have to report it?

30 seconds

INSIDE MARKET

BEST BID and BEST ASK PRICES