NYSE Trading Flashcards
What two types of trading are there on the NYSE?
Floor based training and Arca ECN
What is the SuperDisplayBook?
- The electronic trading book for NYSE classic
- It routes orders electronically to either a floor broker or the NYSE DMM
What is a floor broker?
Employees of each brokerage firm acting as agent only to fill customer orders
What is a Specialist/DMM?
- 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
What is a market not held order?
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
What are the limits of the SuperDisplayBook?
- 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
What is the DMM’s positive obligation?
The DMM must buy stock if there are no other customers buying, or sell stock if there are no other customers selling
What is the DMM’s negative obligation?
If there are already buyers and seller ready to trade, the DMM cannot interposition
Who performs stopping stock, and what does it mean?
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
What is the trade symbol for stopped?
s/t
Who handles odd lots on the NYSE?
DMM’s. Charges an odd lot differential
What does the symbol “s” mean?
Round lots of 100
What does the symbol s/s mean?
Round lots of 10 shares (usually inactively traded companies)
What is a block of shares?
Blocks are 10,000 shares. Note that the FULL amount of a block is printed on the tape
What does the symbol SLD mean?
SLD = out of sequence trade
How much time do trades effected on they NYSE floor have to be reported?
10 seconds
What does the OPD symbol mean?
Opening Delayed.
What is Rule 76 of the NYSE?
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
What is Rule 77 of the NYSE?
Prohibits person on the NYSE floor from
- betting on market
- buying/selling dividends
What is rule 78 of the NYSE?
Prohibits pre-arranged trades to sell linked to a buy-back at the same price
What is Rule 92 of the NYSE?
Requires that customer orders take priority over firm’s own trading account
What is Rule 410 of the NYSE?
Requires that records of orders transmitted to the floor be kept for 3 years
What is Rule 411 of the NYSE?
If a trade is reported erroneously, the customer must still pay ACTUAL price
What is Rule 435 of the NYSE?
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
How are most Block Trades on the NYSE handled?
They are handled by the OTC trading block desks
What is Rule 200 of Regulation SHO?
Created to curb the practice of naked short selling in all EQUITY securities
What is a short sale as defined by Regulation SHO?
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
What would count as being “long” under Regulation SHO?
Seller must own
- the stock and deliver on settlement
- the convertible or derivative and CONVERT or EXERCISE to deliver by settlement
How must every delivery order ticket be marked?
Either Long sale or short sale
What is Rule 201 of Reg. SHO?
If a certain stock’s price drops by 10% or more from previous day’s close, a circuit breaker is triggered for that security
For how long is a short sale only permitted at a price ABOVE the best bid for that security?
For the remainder of the day and the entire next day
What is rule 203 of Reg. SHO?
PRIOR to effecting a short sale in ANY equity security, the short seller must locate the source from where the shares will be borrowed
What is a “threshold security”?
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
What happens if a seller fails to deliver a threshold security?
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
What are the Market Wide Circuit breaker levels, and what are the levels?
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%
What happens with a Level 1 or 2 Drop?
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
What happens with a Level 3 Drop?
This is a 20% drop. If this occurs at any point during the day, the market closes for the remainder of the day
