The Secondary Market Place
Terms in this set (61)
where investors trade securities among themselves and proceeds do not go to the issuer
designated market maker (DMM)
market participant charged with maintaining a fair and orderly market in the stocks they quote.
DMMs must quote at the _____________ a specified percentage of the time, and facilitate price discovery throughout the day as well as at the open, close, and in periods of significant imbalances and high volatility
national best-bid-or-offer (NBBO)
an individual who works for a particular member of the exchange filling orders for the firm and receiving a commission per-order. Present during open-outcry auctions to open and close each session
supplemental liquidity providers (SLPs)
specifically designated off-floor members of the NYSE who play a unique role in the trading of securities on the secondary market. These participants use sophisticated computerized trading strategies to create high volume on exchanges in order to add liquidity to the markets. As an incentive to provide liquidity, the exchange pays them a fee/rebate
a group of monitors around which market participants communicate on the floor of the NYSE
a system of matching electronic orders automatically
a large number of securities or dollar amount presented as one transaction. For purposes of different rules "block transactions" are defined differently
as opposed to a firm quote, an indication of what a market participant might be willing to pay or accept for a security. They must be identified
a violation in which a market maker fails to honor a published firm quote to buy or sell a security at a stated price
what a dealer is willing to pay to a customer who wants to sell.
Customers sell at the _____, and buy at the ______
the higher price in a quote representing what the customer would have to pay/what the dealer is asking the customer to pay. Also called "offer/offered"
Securities traded among dealers rather than on physical exchanges. Includes NASDAQ and also Bulletin Board and Pink Sheet stocks, plus government, corporate, and municipal bonds. sometimes called the second or negotiated market.
a dealer in the OTC market maintaining an inventory of a particular security and a firm Bid and Ask price good for a minimum of 100 shares. Acts as a "principal" on transactions, buying and selling for its/thier account
generally, the difference between a dealer's purchase price and selling price, both for new offering (underwriting spread) and secondary market quotes. For underwritings the spread is the difference between the proceeds to the issuer and the POP
An individual or firm that charges a fee or commission for executing buy and sell orders submitted by another individual or firm.
sell directly to the customer, or buy directly from a customer
The main component of the OTC market. Stocks that meet certain criteria are quoted throughout the day
low-priced stocks of small companies that have no track record
Over-The-Counter Bulletin Board (OTCBB)
a well-known trading system that is both over-the-counter and non-NASDAQ.
pink sheets - OTC pink - Pink markets
a part of the OTC market were thinly traded, volatile stocks change hands
NASDAQ Level 1
the best bid and the best ask. The highest bid, and the lowest ask. Reports quotes
NASDAQ Level 2
identifies each market maker's quote, from which Level 1 pulls the highest bid and lowest ask to provide the "inside market." Report quotes
has input fields that market makers use to enter their quotes.
the difference between the lowest ask/offer price for a security and the price that a particular dealer charges
the difference between the highest bid price for a security and the price that a particular dealer pays an investor for her security
using the proceeds from a sale of securities to buy other securities on the same day.
Riskless Principal Transaction
transaction in which a broker-dealer chooses to act as a principal when they could have acted as an agent for the customer
A quote by a dealer representing a price at which the dealer is prepared to trade.
exchange-listed stock traded OTC primarily by institutional investors
Consolidated Quotation System (CQS)
system used for trading in the third market.
aka INSTINET. An ECN (electronic communications network) used by institutional investors, bypassing the services of a traditional broker. Institutional = INSTINET
Electronic Communications Networks (ECNs)
Electronic trading platforms that allow institutional investors to buy and sell securities directly. a.k.a the fourth market
dark pools of liquidity
large institutional orders for securities that are concealed from the public and executed typically on the fourth market
Regulation NMS (National Market System)
A broad sweeping SEC regulation designed to bring trading and reporting uniformity to US securities markets. Related item(s): order protection rule; minimum increments rule.
any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in listed options
selling stock that has been borrowed from a broker and replacing it at a later date
the sale of shares not owned by the investor but borrowed through a broker and later purchased to replace the loan
buy order made on a stock or other listed security to close out an existing short position
the purchase of securities in one market for immediate resale in another to profit from a price discrepancy
TRACE (Trade Reporting and Compliance Engine)
FINRA-approved trade reporting system for corporate Bonds trading in the OTC secondary market.
Real Time Transaction Reporting System (RTRS)
Up-to-the-minute pricing information regarding eligible municipal bond transactions is made available through an approved portal such as the National Securities Clearing Corporation (NSCC). The data is captured and made available to the marketplace within 15 minutes of a trade by the MSRB Real Time Transaction Reporting System (RTRS).
an order telling a broker to buy or sell a specific security at the best currently available price
orders to buy or sell a security at a specified price or better
an order that is activated only if the market price hits or passes through the stop price. Does not name a price for execution
a stop order that once triggered must be filled at an exact price (or better)
An order to buy a security at a price below the current market price executable at a specified price or lower/better.
Good till cancelled
buy stop order
An order to buy a security that is entered at a price above the current offering price and that is triggered when the market price touches or goes through the buy stop price.
a stock trading in a narrow price range, trading "sideways"
another name for a sell-stop order. So named because an investor's losses are stopped once the stock trades at a certain price or lower
an order to buy a security at a price above the current market price triggered only if the market price hits or passes through the stop price
a stop order that once triggered must be filled at an exact price (or better)
Fill or Kill (FOK)
Order to buy or sell a particular security which, if not executed immediately, is canceled. Orders are placed when a client wants to buy a large quantity of shares of a particular stock at a particular price.
Immediate or Cancel (IOC)
Execute any portion available immediately
Cancel any balance remaining
All or none (AON)
A type of order where the client wants the entire order executed or none of it. A type of best efforts underwriting in which the issuer will sell the entire amount or cancel the entire issue
a market order for a security placed before the opening of the next trading session and filled at the opening market price for the security
a market order for a security filled on the closing trade for the session, or as close to the closing trade as possible
Do Not Reduce (DNR)
A buy-limit or sell-stop order that will not be reduced for the payment of a cash dividend.
unnecessarily inserting another party between the broker-dealer and the customer. A violation.
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OTHER SETS BY THIS CREATOR
Chapter 18 - The Primary Marketplace
Chapter 17 - Professional Conduct and Ethical Concerns
Chapter 16 - Regulatory Requirement, Including Communications
Chapter 15 - Tax-advantaged accounts
THIS SET IS OFTEN IN FOLDERS WITH...
Chapter 12 - Margin Accounts
Chapter 1 (Economic Factors)
Chapter 2 - Business Information, Financial Reporting
Chapter 13 - Brokerage Office Procedures