New York Stock Exchange Trading

Question 1

Floor brokers

Answer 1

work for retail brokerage firms; act only as agents, trying to get best deal for customer

Question 2

$2 brokers

Answer 2

independent brokers, assist floor brokers when busy

Question 3

SuperDisplayBook

Answer 3

book of open orders on NYSE

Question 4

Ticker Symbol: s

Answer 4

indicates a round lot; 2s would be 2 round lots

Question 5

Ticker Symbol: s/s

Answer 5

Used for expensive/rarely traded stocks; shows a round lot of 10; 3s/s would be 3 lots of 10

Question 6

Ticker Symbol: SLD

Answer 6

Stock was sold but is being reported out of sequence

Question 7

Ticker Symbol: OPD

Answer 7

Opening delayed; stock didn’t start trading at opening, usually to adjust price due to news that happened after previous days closing

Question 8

Ticker Symbol: s/t

Answer 8

Indicated that the trade went through with a “stopped” price, ie the DMM locked in a price while the customer tried to find a better one

Question 9

Block

Answer 9

10,000 shares; still listed as 10,000s, but only means 10,000 shares not 10,000x100

Question 10

Rule 76

Answer 10

Orders cannot be “crossed” within a firm, ie a firm cannot match its own customers buy and sell orders. Instead they must first be put on the market

Question 11

Rule 77

Answer 11

Lists some prohibited practices for people on the trading floor, such as bet on the course of the market and buy or sell privileges to receive securities

Question 12

Rule 78

Answer 12

No prearranged trades

Question 13

Rule 92

Answer 13

customer orders get priority over firms orders

Question 14

Rule 410

Answer 14

Records of trades must be kept for 3 years

Question 15

Rule 411

Answer 15

If a trade is reportedly inaccurately the customer must pay the actual price

Question 16

Rule 435

Answer 16

Lists prohibited practices for member firms

Question 17

3 Levels of Market-Wide Circuit Breakers

Answer 17

Level 1 Drop: 7%
Level 2 Drop: 13%
Level 3 Drop: 20%

Question 18

What happens if there is a Level 1 or 2 drop before 3:25PM?

Answer 18

Markets close for 15 minutes

Question 19

What happens if there is a Level 1 or 2 drop after 3:25pm?

Answer 19

No close

Question 20

What happens when there is a Level 3 drop at any time?

Answer 20

Markets close for rest of day

Question 21

What limits are there to actively traded (Tier 1) stocks?

Answer 21

Cannot trade more than 5% above or below average price of last 5 minutes

Question 22

What limits are there to less actively traded (Tier 2) stocks?

Answer 22

Cannot trade more than 10% above or below average price of last 5 minutes

Question 23

Fundamental Price Move

Answer 23

Trades cannot happen for 15 seconds due to trade limits; trading stops for 5 minutes to allow market to digest what is causing move

Question 24

4 Requirements to move listing to NYSE

Answer 24

2,200 shareholders
$100,000,000 value of outstanding shares (market cap)
Minimum of 1,100,000 shares outstanding
Average monthly trading volume of 100,000

Question 25

Competitive Trader

Answer 25

someone who trades on the floor of the NYSE for his own account; almost completely gone

Question 26

4 Rules for Floor Brokers

Answer 26

1 - bids and offers must at least be for the minimum trading unit (usually 100 shares 2 - high bid/low offer have precedence 3 - bids and offers must be publicly announced 4 - if two bids or offers are made at the same time and price, higher quantity gets precedence

Question 27

How do you determine the size of the market from a DMM book?

Answer 27

Size of highest bid & size of lowest ask

Question 28

Who is responsible for reporting trades and how long do they have?

Answer 28

executing member and 10 seconds

Question 29

If a stock falls by 10% in a single day what is the minimum bid that it can be shorted by?

Answer 29

An bid higher than the asking price