Equity Trading Markets Flashcards
Market Order
Customer wants to buy/sell. Execution is Certain at most advantageous price obtainable immediately after the order is entered. Customer specifies security and size of order only.
Good Till Canceled Order (GTC)
AN ORDER TO BUY/SELL THAT REMAINS IN EFFECT UNTIL IT IS EITHER EXECUTED OR CANCELED. ALSO CALLED AN OPEN ORDER.
Not Held Order
An order that gives the floor broker discretion as to time and price. (DMMs can’t accept these orders.)
OTC Pink Markets
May be non-reporting companies
OTCBB (Bulletin Board)
Must be reporting cos.
Inside Market / Level 1 Nasdaq
Highest bid and lowest asked/offer. W/o identifying the market Maker. (And smallest size)
Level 2 Nasdaq
Quotes of all market makers that deal in the security
Level 3 Nasdaq
Same as Level 2 but allows market makers ability to change quote
Insider Regulation - Act of ‘34
Officer/director with greater than 10% owner must register w/ SEC w/in 10 days. Report purchases and sales by end of 2nd business days. (To sell must file 144)
Foruth Market
Where institutions trade securities between each other
Third Market
Listed securities traded OTC.
Facilitated by Consolidated Quotation System (CQS)
Trades INCLUDED in NYSE volume totals
Full Registration Timeline
1) Pre-reg period
-Doc prep
-No communication w public
2) File Reg Statement: Begin 20 day cooling off prd
-No sales/money accepted
-Issuer distributes prelim prospectus (red herring)
+all info except exact price/date
+non-binding indications of interest
-“Blue Sky” the issue (register at state level)
-Final due dili meeting held prior to effective date
3) Post registration period: Effective date
-Sales confirmed and final prospectus delivered
-Publish tombstone ad
What information can be found on the Consolidated Quotation System?
The Consolidated Quotation System (CQS) provides subscribers with bid/asked quotations for securities listed on national exchanges, including quotes from OTC market makers in those securities (the third market).
Settlement for All Securities
Corporate and municipal securities settle regular-way three business days after the trade date (T + 3). Mutual fund shares typically settle the same day, while U.S. Treasury securities and option contracts settle T + 1. Keep in mind that an exercised stock option involves the purchase and sale of a corporate security, and, therefore, settles T + 3.
Dark Pool
Trading between investors, allowing them to buy and sell securities anonymously without quotes being displayed
IOC Order
An immediate-or-cancel (IOC) order must be executed immediately but does not need to be executed in its entirety. Part of the order may be executed.
Day Order
An order to buy or sell that, if not executed, expires at the end of the trading day on which it was entered.
Level X Market Decline
Level 1: -7% vs. close of S&P 500: 15min halt
Level 2: -13% vs. close of S&P500: 15min halt
Level 3: -20% vs. close of S&P500: end trading day
**No halt for Level 1/2 if occurs after 3:25pm
Order Ticket
- Customer Acct Number
- Action (buy/sell/sell short)
- Description of security
- Quantity
- Type of account (cash/margin)
- Discretionary/nondiscretionary
- Solicited/unsolicited
- Time of entry
- Price qualifications (stop, limit, stop limit)
Fill or Kill order (FOK)
Entirety immediately, Nasdaq only
IOC
Whatever you can get
AON (All or nothing)
Entirety but not immediately (must be 1 transaction), Nasdaq only
GTC
Good until filled or cancelled
Regulation A Offering
Exempt from Act of 1933: Small biz raising up to $5mm in 12 month time frame. Investors receive “offering circular” instead of prospectus
