Chapter 27 Working With the Institutional Client KT

Question 1

Has the responsibility of managing a dealer’s trading capital to encourage market flows and facilitate client orders. Also known as a proprietary trader.

Answer 1

liability traders

Question 2

Has a primary function of executing orders on behalf of clients as an agency trader or on behalf of the dealer as a liability trader.

Answer 2

institutional trader

Question 3

Reports to a senior analyst, mainly builds financial or pricing models, conducts industry or company research and helps write reports and commentary.

Answer 3

research associate

Question 4

The role that broker/dealers play in the underwriting and distribution of new issue securities.

Answer 4

sell side

Question 5

A continuous, real-time investment management database that tracks all security transactions and investments and links the various operating departments of a firm.

Answer 5

straight-through processing

Question 6

A bundling of equity trading-related services used primarily by hedge funds.

Answer 6

prime brokerage

Question 7

The type of trading that uses of sophisticated mathematical algorithms to execute equity trades over electronic trading systems.

Answer 7

algorithmic trading

Question 8

Trader who manages trades on behalf of institutional clients and does not trade the dealer member’s capital. Also known as agency trader.

Answer 8

coverage traders

Question 9

An equity marketplace that does not offer pre-trade transparency on trader orders.

Answer 9

dark pools

Question 10

The process whereby institutional clients can directly access the exchanges electronically via their investment dealers rather than placing orders for execution with their investment dealer.

Answer 10

direct electronic access (DEA)

Question 11

A list of products that a trader wishes to sell or buy as quickly as possible.

Answer 11

axe sheets

Question 12

An arrangement where an investment firm purchases services via commission dollars rather than an invoice for the goods or services provided.

Answer 12

soft-dollar arrangement

Question 13

Who buys the securities and services provided by the sell-side of the market?

Answer 13

buy side

Question 14

A type of investment client that includes mutual funds, insurance companies, pension funds and corporate treasuries.

Answer 14

institutional clients

Question 15

A sub-set of algorithmic trading that is characterized by a very large number of orders for individual trades of very small size done at extremely high speed.

Answer 15

high frequency trading (HFT)

Question 16

An expert in respect to a specific company or sector who provides other front office staff with ongoing analytical coverage in their area of specialty.

Answer 16

analyst