Trading Markets Flashcards
Trading Market Basics, Orders' trading Customer disclosure and settlement rules, Basic Tacrules for Equities
Sell Stop Orders are:
Placed BELOW the current market and are triggered as the market FALLS
OBLOSS
A customer places an order to Buy 100 ABC @ 90 stop what does this mean?
This is a buy stop order placed above the current market value (OSLOBS) If the mkt price rises to $90 the order is executed and becomes a market order to buy. Once elected the order is executed at the net available price, order is executed but specific price is unknown.
A dual listed stock is:
Listed on more than one exchange; typically on the NYSE and a smaller regional exchange and any exchange is a FIRST MARKET
What changes after a spin off?
Cost basis does NOT change, however the share amount of the spin off is deducted from the original cost basis of the stock owned.
The EX date for a stock split, stock dividends and rights offerings?
1 Business day following the payable date.
The Ex date for cash dividends?
1 business day prior to the record date
Characteristics of ECN’s?
ECN’s (Electronic Communication Network) trade listed stocks “away” from exchanges
What appears on a municipal bond trade?
Broker Dealer name, accrued interest, and the capacity in which the transaction was executed (Agent or Broker)
A customer places an order to SELL 100 XYZ at 38 STOP, what does this mean?
The order is elected at 38 or lower and executed at the next available price.
If an NYSE stock is dual listed where would it also be traded?
Boston Stock Exchange; dual listed stocks are traded on one National exchange and a regional exchange. NYSE is the national Boston is the regional. Chances are a stock starting there then went national after growth.
IF a client enters an order to buy bonds BUY 5M ABC 9s M ‘35 @90 GTC what price will this be executed at?
89 or 90. The customer wants the best price but not to exceed 90.
The primary market is:
Sale of New issues for the first time. No trading takes place.
What type of transactions can be done in the Fourth Market?
Example: Mutual Fund buying shares of stock directly from an insurance company. Fourth Market is where ECN’s trade and simply match orders for a small fee.
An order ticket is marked: Sell Short 100 ABC@ $50 this means:
The customer does not own the shares and will borrow shares to deliver on settlement.
Which order guarantee a specific price or better?
Open BUY Limits, Open Sell Limits
A “limit” specifies that the execution must comply with the limit price specified or better. Limit order are filled at that price or better.
Sell Stop Orders are:
Used to sell securities at prices lower than the current market and do NOT guarantee a specific price or better, they are used to STOP a loss on the position. If the market drops to the stop price, the order is elected and becomes a market order to sell at the prevailing market price - so no specific execution price can be guaranteed.
What items must be disclosed on municipal bond trade confirmations?
In whole Call Dates, for industrials the name of the corporation guaranteeing the issue, for revenue bonds the source of revenue backing the issue.
What is true of STOP orders?
Buy stop can accelerate price advances in bull markets, and limit losses on short stock positions.
Sell Stops can accelerate price declines in bear markets, and limit losses on long stock positions.
The order to SELL 100 ABC @ 90 STOP means:
The order is elected at 90 or below and executed after the order is elected at the next available price.
Stock options trade on the:
CBOE
The Second Market is:
Trading of OTCBB - securities not listed on an exchange.
If a customer receives a fully paid security enrolled in DTC’s DRS system what will the customer receive?
Statement Of Ownership
CQS
Consolidated Quotation System - aggregates and displays quotes for all market makers in exchange listed issues - both NYSE and NYSE American or AMEX,
UQDF
Aggregates and displays quotes for all market maker in NASDAQ issues.
Which Securities trade in the second Market?
US Government Bonds, and Municipal Bonds
What is Cost Basis?
The price paid including any commission or mark ups
Market Makers in the third Market trade?
Listed stocks.
Is it common stock or preferred stock?
ONLY common stock is affected by a stock split or stock dividend. RTFQ.
Trades of the NYSE that take place in all markets are consolidated and reported through:
Network A tape
Network B tape
reports trades of NYSE American (AMEX) and regional exchange listed issues
Network C tape
NASDQ trades regardless of the market venue where the trade took place
