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Flashcards in Secondary Market & Equity Trading Deck (111)
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1

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

Principal

2

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

Agent

3

Compensation charged when a dealer sells shares from inventory

Mark-up

4

Compensation charged when a dealer purchases shares for inventory

Mark-down

5

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

Commission

6

Standard trading unit of equity securities

Round lot (100 shares)

7

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

Listed securities

8

Responsible for maintaining an orderly market in the stocks for which he is responsible on the NYSE floor.

Designated Market Maker

9

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

Market order

10

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

Stop order

11

Can be executed only at the specified price or better

Limit order

12

Prohibited practice of not doing business at the quoted price

Backing away

13

The FINRA policy that serves as a guideline for fair markups, markdowns and commissions

5% Markup Policy

14

The best bid and best asked price in Nasdaq

The inside market

15

A market that matches buyers and sellers, as on the floor of the NYSE

Auction market

16

The process of acting as dealer by standing ready to buy or sell securities from inventory and making money from the spread, as on NASDAQ

Market making

17

Over-the-counter, negotiated-price trading of exchange-traded securities

Third market trade

18

A type of alternative trading system (ATS) that trades listed stocks and other exchange-traded products, generally between broker dealers and institutions

ECN (Electronic Communications Network)

19

Quoting service for securities that do not meet listing requirements of other exchanges, but requires quoted companies to file finanial reports with the SEC

Over-the-Counter Bulletin Board

20

Occurs when a company no longer meets the listing standards of an exchange

De-listing

21

Order that protects a profit or limits a loss in a short stock position

Buy stop order

22

Order that protects a profit or limits a loss in a long stock position

Sell stop order

23

Orders that are entered below the current market price

Buy limits, sell stops and sell stop limit orders

24

Orders that are entered above the current market price

Sell limits, buy stops and buy stop limit orders

25

Becomes a market order when triggered

Stop order

26

Orders that are not to be reduced by a cash dividend

DNR

27

Order ticket must be filled out prior to

order execution

28

An OTC equity quotation facility that does not require quoted companies to file financial statements with the SEC

OTC Pink Sheet

29

A transaction in securities that is executed for a commission

Agency transaction

30

The dealer charge when securities are sold as principal

Markup