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Trading Markets > NYSE Trading > Flashcards

NYSE Trading Flashcards

1
Q

What two types of trading are there on the NYSE?

A

Floor based training and Arca ECN

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2
Q

What is the SuperDisplayBook?

A
  • The electronic trading book for NYSE classic

- It routes orders electronically to either a floor broker or the NYSE DMM

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3
Q

What is a floor broker?

A

Employees of each brokerage firm acting as agent only to fill customer orders

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4
Q

What is a Specialist/DMM?

A
  • an exchange member
  • acts as a market maker (dealer) in assigned securities
  • Executes orders to buy via superdisplaybook and matches these orders with sell orders
  • The human element allows the DMM to improve prices for a customer
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5
Q

What is a market not held order?

A

These orders are routed to a floor broker, where it is not held to immediate execution. The floor broker tries to get a better price

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6
Q

What are the limits of the SuperDisplayBook?

A
  • Market orders accepted up to 999,999 shares
  • Limit orders up to 3,000,000 shares

**The NYSE does not accept STOP nor STOP LIMIT orders

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7
Q

What is the DMM’s positive obligation?

A

The DMM must buy stock if there are no other customers buying, or sell stock if there are no other customers selling

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8
Q

What is the DMM’s negative obligation?

A

If there are already buyers and seller ready to trade, the DMM cannot interposition

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9
Q

Who performs stopping stock, and what does it mean?

A

DMM’s perform stopping stock. If a customer feels that a DMM’s quote is too high and wishes to see if any other trader will sell for less, the DMM can say “You are stopped at 15 for 200 shares”. This means that the customer can go look for a better price but can come back at the stopped price of 15

*DMM can only stop for PUBLIC orders

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10
Q

What is the trade symbol for stopped?

A

s/t

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11
Q

Who handles odd lots on the NYSE?

A

DMM’s. Charges an odd lot differential

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12
Q

What does the symbol “s” mean?

A

Round lots of 100

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13
Q

What does the symbol s/s mean?

A

Round lots of 10 shares (usually inactively traded companies)

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14
Q

What is a block of shares?

A

Blocks are 10,000 shares. Note that the FULL amount of a block is printed on the tape

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15
Q

What does the symbol SLD mean?

A

SLD = out of sequence trade

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16
Q

How much time do trades effected on they NYSE floor have to be reported?

A

10 seconds

17
Q

What does the OPD symbol mean?

A

Opening Delayed.

18
Q

What is Rule 76 of the NYSE?

A

Prohibits crossing of orders within a firm. The security must be first offered in trading market at .01 point more than bid held by firm. If offer not taken, cross can be performed

19
Q

What is Rule 77 of the NYSE?

A

Prohibits person on the NYSE floor from

  • betting on market
  • buying/selling dividends
20
Q

What is rule 78 of the NYSE?

A

Prohibits pre-arranged trades to sell linked to a buy-back at the same price

21
Q

What is Rule 92 of the NYSE?

A

Requires that customer orders take priority over firm’s own trading account

22
Q

What is Rule 410 of the NYSE?

A

Requires that records of orders transmitted to the floor be kept for 3 years

23
Q

What is Rule 411 of the NYSE?

A

If a trade is reported erroneously, the customer must still pay ACTUAL price

24
Q

What is Rule 435 of the NYSE?

A

Prohibits member firms from:

  • effecting trades of excessive frequency/size
  • effecting trades at higher or lower prices to create misleading market activity
  • anything that attempts to manipulate the appearance of the market
25
Q

How are most Block Trades on the NYSE handled?

A

They are handled by the OTC trading block desks

26
Q

What is Rule 200 of Regulation SHO?

A

Created to curb the practice of naked short selling in all EQUITY securities

27
Q

What is a short sale as defined by Regulation SHO?

A

Sale of a security that

  • the seller doesn’t own
  • is settled by the delivery of a security the seller doesn’t own
  • is settled by the delivery of a security borrowed for the account of the seller
28
Q

What would count as being “long” under Regulation SHO?

A

Seller must own

  • the stock and deliver on settlement
  • the convertible or derivative and CONVERT or EXERCISE to deliver by settlement
29
Q

How must every delivery order ticket be marked?

A

Either Long sale or short sale

30
Q

What is Rule 201 of Reg. SHO?

A

If a certain stock’s price drops by 10% or more from previous day’s close, a circuit breaker is triggered for that security

31
Q

For how long is a short sale only permitted at a price ABOVE the best bid for that security?

A

For the remainder of the day and the entire next day

32
Q

What is rule 203 of Reg. SHO?

A

PRIOR to effecting a short sale in ANY equity security, the short seller must locate the source from where the shares will be borrowed

33
Q

What is a “threshold security”?

A

These are a list of securities that are hard to borrow, having fails to deliver of 10,000 or more and that amount equals half a percent of the company’s total shares outstanding. Security must be on this list for 5 business days

34
Q

What happens if a seller fails to deliver a threshold security?

A

It must be bought in no later than 10 Business days (13 settlement days total). Because of the MANDATORY buy-in, large naked short positions in threshold securities shouldn’t occur

35
Q

What are the Market Wide Circuit breaker levels, and what are the levels?

A

These apply to all NMS (NYSE, AMEX, NASDAQ) and is based on the S&P 500. There are 3 levels:
Level 1 Drop - 7%
Level 2 Drop - 13%
Level 3 Drop - 20%

36
Q

What happens with a Level 1 or 2 Drop?

A

If the level 1 or 2 drop occurs before 3:25, market closed for 15 minutes. If its after 3:25, the market stays open until close

37
Q

What happens with a Level 3 Drop?

A

This is a 20% drop. If this occurs at any point during the day, the market closes for the remainder of the day

Trading Markets (5 decks)

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