Unit 17 Flashcards
What are the two types of bond deliveries never subject to reclamation?
- Bond certificates subject to an in whole call
- Bonds where the issuer goes into default after the trade date
Occurs when a buyer, after accepting securities as good delivery, later discovers that the certificates were not in good deliverable form. The securities can be sent back to the selling dealer with a form attached
Reclamation
A situation in which the BD on the sell side of a transaction or contract does not deliver the specified securities to the BD on the buy side
The firm representing the seller just buy in the securities after 10 business days from the settlement date
Fail to deliver
A standard form that duplicates the back of a stock certificate and is used for transferring the stock to the new owners name
Stock/bond power
A printed statement showing the obligation of a seller to deliver securities or rights to the purchaser. A due bill is also used as a pledge to deliver dividends when the transaction occurs after the record date
Due bill
When does a sellers option settle?
No sooner than T+3
A settlement contract that calls for delivery and payment according to a number of days agreed to by the buyer. The earliest delivery can be made is settlement plus 1 business day
Buyer must be given one day prior written notice if going to settle early
Sellers option
What is an example of clearinghouse funds?
Personal or business checks
Represents payments that have same day availability
Ex: inter dealer trades in government securities
Federal funds
When do money market securities settle?
Same day
When do T-Bills, T-Notes, T-Bonds and options settle?
T+1
When do corporate, municipal and government agency securities settle?
T+2
Delivery of the certificate by the seller and payment by the buyer on settlement date- currently T+2 for the regular way
Good delivery
A series of rules, interpretations and explanations designed to make uniform, where practical, custom, practice, usage and trading technique in the investment banking and securities business, particularly with regards to operational and settlement issues
The Uniform Practice Code (UPC)
Refers to a security not currently traded on any of the OTC quoting marketplaces or quoted on any other US quotation medium such as Nasdaq
Grey market
The direct trading of larger blocks of securities between institutional investors through a computer network (ECN)
Open 24 hours a day and acts solely as agents
Forth market
A trading market in which exchange listed securities are traded over the counter
Trades are reported within 90 seconds of execution
Third market
Operated by MSRB
Collects and disseminates transaction data in municipal securities for market transparency, surveillance purposes and analytics
Data is captured and made available within 15 minutes of trade
Maintains audit trail and provides regulators with transaction data and related info to enhance surveillance capabilities
Real time transaction report system (RTRS)
Funded and operated by MSRB
Centralized online site used to locate key info about municipal securities
Presented to retail, nonprofessional investors
Free of charge
Electronic municipal market access (EMMA)
A supervisory employee at a BD
A party in a transaction who is trading for the parties own account
Principal
- An individual or firm that effects securities transactions for the accounts of others.
- A securities salesperson who represents a BD or issuer when selling or trying to sell securities to the investing public; this individual is considered this whether he actually receives or simply solicits orders
Executes all orders brokerage firms leave with them
Agent
Facilitates through which members report transactions in stocks listed on the NYSE and Nasdaq stock market when the trades are made off the exchange (OTC)
Market hours: 9:30am- 4:00pm EST
Trade Reporting Facilities (TRF)
What is excluded from TRACE?
- Debt foreign governments
- Money market instruments
- Debt securities that are not depository trust eligible
FINRA approved trade reporting system for corporate bonds trading in the OTC secondary market
It is only a reporting system
Both sides of transaction must report
Trades must be reported no later than 15 minutes after execution
The Trade Reporting and Compliance Engine (TRACE)
Trading volume that occurs or liquidity that is not openly available to the public
Bulk of volume is trades engaged by institutional traders and trading desks away from exchange markets. Large volume transactions
Dark pools
Provides subscribers with all services and allows registered market makers to input and update their quotes on any securities in which they make at market
Nasdaq Level 3
Available to approved subscribers only
Provides the current quote and quote size
Market maker just guarantee that the quote is firm for at least 100 shares
Nasdaq Level 2
Available to registered reps through a variety of public vendors
Displays the inside market only, the highest bid and the lowest ask
Nasdaq Level 1
What would not be included in an order ticket?
- Current market price
- Clients name and address
What information is in an order ticket?
- Account number
- Rep number
- Solicited vs unsolicited
- Discretionary
- Symbol
- Number of shares and price
- Buy or sell
- Options
- Restrictions
- Type of account
- Time and date
The form completed by a registered representative that contains customer instructions regarding the placement of an order
Order memorandum
