Unit 8 - Trading Flashcards
for OTC quoted securities, what is the three-quote rule?
there needs to be at least 2 market makers displaying quotes or there must be min. of three dealers to determine the prevailing price
when calculating a markup and there is a buy and sell, which side is the markup applied to?
total of both sides - The firm must consider the entire transaction (a proceeds transaction) when calculating the markup
What types of orders are lowered when stock goes ex. dividend?
only those types of orders where price is placed below market - buy limit orders and sell stops (BLISS)
define backing away in trading securities
it is a rules violation that is a failure to honor a stated quote is a rules violation
Define a supplemental liquidity provider and located on or off trading floor?
They are located off floor and are required to maintain a bid or an offer at least 10% of the trading day.
what types of orders must a specialist (designated market maker) refuse?
Specialists (designated market makers) cannot accept not-held orders or good-for-a-month orders
who is responsible for Not-held orders?
floor brokers (commission brokers)
Trade reports made to the Consolidated Tape report commissions and/or markups?
neither
What does the Consolidated Tape System (CTS) show?
receives and validates the last sale price and size of listed equity securities transactions on the NYSE and other regional exchanges and FINRA.
what types of transactions are not shown on the consolidated tape system?
Options transactions are not reported to the CTS.
What is the order protection rule?
SEC regulation NMS (Nat’l market system) requires that firms holding limit orders not trade through or ahead of orders. aka if firm buys at limit buy order price, must fill the customer’s order
position trading versus broker, or an agent?
Position trading is simply trading as principal, or dealer, for a firm’s own account. The opposite role is that of a broker, or an agent, purchasing or selling securities in the secondary market for customers.
What does Rule 144 do?
Form 144 must be filed with SEC for all sales of restricted stock by control persons. Therefore persons who hold control/restricted securities can sell them only in limited quantities.
are securities bought in a registered public offering restricted or not restricted?
no restricted and do not need to file 144 with SEC
what type of securities trade in second markets - an OTC market- unlisted or listed?
unlisted. divided into Nasdaq & non-Nasdaq for equities
