Primary + Secondary market Qs Flashcards
What is securities lending and borrowing used for?
To cover short posiitons by hedge funds in long/short strategy
What is leveraged trade execution used for?
Where prime broker lends cash to the fund to finance trades
What is rehypothecation used for?
Prime broker reuses collateral posted by the hedge fund for their own purposes
Authorisation to deal comes from who?
regulator
not the exchange
Features of discount brokers?
Lower fees
Due to acting as execution only capacity with no advice
More restricted services
Execute and eliminate meaning?
A limit order where unfilled amounts are cancelled
Riskless principal transaction?
This is when IDBs do not take a position in the markets - they don’t hold long only or short only positions
IDB’s - how does it act like a central counterparty?
To make sure both parties remain anonymous
TradeWeb - what kind of trading method is this?
Dealer-to-customer bond trading
Criticism of algorithmic trading?
Systemic risks or flash crashes that it can create
US equivalent of GEMMS?
Primary dealer
Who are GEMMS obliged to make two-way prices to and who do they not have to?
Customers on demand - up to a size agreed with the DMO
Don’t have to quote firm two-way prices to other GEMMS
Decentralised dealer market?
Method of dealing corporate bonds - different to equities which is generally on exchanges.
Dealers provide liquidity by being willing to buy or sell bonds
Name of a broker that offers little to no investment advice?
Discount broker
