Chapter 7: Trading, Settlement, and Prohibited Activities Flashcards
The three components of a trade:
- The standard trading unit
- The settlement Period
- The minimum quotation spread
The quantity of a security that makes up a standard trading unit is defined in the _________ ________ __________ __________.
Universal Market Integrity Rules (UMIR)
Orders (or portions of orders) to buy or sell that are not in multiples of standard trading units are considered to be ____ _____.
odd lots
What are the standard trading units and odd lots of a security that is less than $0.10 per unit?
Standard Trading Unit = 1,000
Odd Lot = 1 to 999
What are the standard trading units and odd lots of a security that is between $0.10 and $1.00?
Standard Trading Unit = 500
Odd lot= 1 to 499
What are the standard trading units and odd lots of a security that is more than $1.00?
Standard Trading Unit = 100
Odd Lot= 1 to 99
The process of transferring securities into the account of a buyer and cash into the seller’s account following a trade of stocks, bonds, futures, or other financial assets is known as ______ ________.
trade settlement
The _________ _________ is the time between the date of a securities transaction and the date on which ownership of the security is transferred
settlement period
What is the settlement period for Gov’t of Canada T-Bills?
T+0 (Same Day Settlement)
What is the settlement period for Gov’t of Canada Bonds?
T+2 (Trade date plus two business days)
What is the settlement period for Preferred and common shares?
T+2 (Trade date plus two business days)
When clients sell a security at the market, they receive the _____ ______, which is the highest price any buyer is willing to pay.
bid price,
When they buy a security at the market, they pay the ____ _____ (sometimes called the _____ _____), which is the lowest price at which any seller is willing to sell
Ask Price
Offer Price
The minimum acceptable range between bid and ask prices when quotations are given for securities.
The minimum quotation spread
For a security over $0.50, the minimum quotation spread is at least _____
$0.01 (EX: $2.34 (bid) and $2.35 (ask)
For each purchase and sale instruction received from a client, you must complete an _____ _______ in accordance with the rules enforced by provincial authorities, the exchanges, and IIROC
order ticket
The order ticket must include the following details
- The client’s name or the account number (or both)
- The quantity and description of the security (most often shown by a symbol)
- A notation as to the price (e.g., limit, market, or on-stop)
- A notation as to whether the order is professional (PRO), non-client (N–C), or employee (EMP)
- A notation as to whether the order is a short sale or discretionary order
It is essential that you _______ each order back to the client
repeat
Generally speaking, order types are categorized by the following characteristics:
Duration - How long is the order valid for?
Price Restrictions- Have any limits been set on the price?
Special Instructions- Are there any special instructions attached to the order?
Other- Are there any changes to the original order or is the client a PRO?
A GTC order on the TSX expires after ____ days
90
Special terms orders are executed on a ______ _______ _______.
Best Efforts Basis
What is a FOK order?
A fill or kill order is an order in which as much as possible must be filled immediately, after which the balance of the order is cancelled.
What is a Contingent order?
It is an order that takes second place to a primary order. (EX: Buy 1,000 shares of XYZ at market and Sell 10 calls at the current offer price.)
A ________ _______ _______ is a special term order in which the buying and selling parties agree that
delivery of the securities will be delayed beyond the
usual three-day settlement period to a date specified
in the order
delayed delivery order
