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SERIES 7 > Unit 8- Trading Securities > Flashcards

Unit 8- Trading Securities Flashcards

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Series 7 Top-off Exam flashcards
1
Q

OTC Market

A

inter-dealer market in which unlisted securities trade

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2
Q

Second Market

A

OTC Market

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3
Q

Third Market

A

Nasdaq Intermarket, in which exchange listed securities are traded in the OTC market by market makers

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4
Q

Fourth Market

A

for institutional investors to trade large blocks of stock

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5
Q

ATS (Alternative Trading Systems)

A

alternative trading systems used for dark pools

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6
Q

FINRA TRF

A

Trade Reporting Facility is an automated trade reporting and reconciliation service operated by ACT

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7
Q

CHB (Commision House Broker)

A

floor brokers

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8
Q

Two Dollar Brokers

A

when CHB too busy, go to two-dollar brokers who charge commisions

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9
Q

Registered Trader

A

trade primarily for their own accounts and registered with SEC

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10
Q

DMM (Designated Market Maker)

A

facilitate trading in specific stocks

FCTN: maintain a fair and orderly market

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11
Q

Level 1 Halt

What % drop? How long of a halt?

A 
7%
15 minutes (before 3:25), no halt (after 3:25)
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12
Q

Level 2 Halt

What % drop? How long of a halt?

A 
13%
15 minutes (before 3:25), no halt (after 3:25)
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13
Q

Level 3 Halt

What % drop? How long of a halt?

A

20%

The rest of the day

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14
Q

SLP (Supplemental Liquidity Provider)

A

off-floor market maker operates and competes wtih DMM.

- Must maintain bid or offer in an assigned block for at least 5% of trading day

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15
Q

Crossing Orders

A

one order to buy 1,000 and one order to sell 1,000

DMM may use these orders to fulfill one another if a bid for $.01 higher is rejected by the trading crowdf

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16
Q

Market Order

A

executed immediately at the market price

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17
Q

Limit Order

A

limits the amount paid and received for securities

Priority is based on first orders submitted (time)

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18
Q

Stop Order (also Stop Loss Order)

A

If the stock reaches the stop price (trigger price), the order goes through

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19
Q

Stop Limit Order

A

If the stock reaches the stop price, the stop order changes into a limit order

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20
Q

Benefits of buying a stop order

A

protects a profit/limits a loss in a short position

21
Q

Benefits of SELLING a stop order

A

protects profits/limits loss in a long position

22
Q

Day Orders

A

only valid for that trading day

23
Q

Good-Till-Canceled Orders (GTC)

A

valid until executed or canceled

24
Q

At-the-Open / Market-On-Close Orders

A

executed at the opening or close of market

25
Q

NH (Not Held) Orders

A

customer agrees not to hold the broker to a particular time and price of execution.
*Can only be DAY ORDERS

26
Q

Fill or Kill Order (FOK)

A

fill the order completely or kill it

27
Q

IOC- Immediate or Cancel Order

A

immediate fill the order, partially fill is fine, and then cancel the rest of the order

28
Q

All-or-None (AON) Orders

A

Executed in their entirety or not at all, but they can be Day Orders OR GTC orders

29
Q

Alternative Orders (OCO)

A

Place two orders for two scenarios. If one order is executed, the other is canceled.

30
Q

Do Not Ship (DNS) Orders

A

limit order to buy or sell that can be executed by the NYSE only

31
Q

Regulation SHO

A

Short Sales may now occur at any time during trading day.

Locate Requirement: must locate the securities for borrowing to ensure delivery

32
Q

Super Display Book (SDBK)

A
  • Nearly 75% of orders are processed through here
    Broker/Dealers use this computerized order routing system to route an order directly to the appropriate equity post on the trading floor
33
Q

CTS (Consolidated Tape System)

A

receives, validates, and sequences the last sale price and size of all equity transactions

34
Q

DIGITS & VOL DELETED (TAPE MESSAGE)

A

first digit of price and volume will be dropped

35
Q

REPEAT PRICES OMITTED (TAPE MESSAGE)

A

only show price of transactions that differ in previous report

36
Q

SLD (TAPE MESSAGE

A

did not report a sale on time

37
Q

HALT

A

trading in a security is halted

38
Q

Who is the OTC regulated by?

A

FINRA & SEC

39
Q

OATS (Order Audit Trail System)

A

tracks orders, quotes and other trade info

40
Q

Backing Away

A

refusing to do business at quoted price is VIOLATION

41
Q

Workout Quote

A

aproximate figure, often used with block positions

42
Q

Nominal Quote

A

someones assessment of an inactively traded security- not a firm quote

43
Q

In order to charge markups and markdowns, the market maker must be acting as PRINCIPAL/AGENT?

A

PRINCIPAL- dealing with inventory that holds financial risk

44
Q

NASDAQ Quote Service: Level 1

A

ONLY INSIDE QUOTE (eg. DWAQ 35 - 35.13) - not guaranteed

45
Q

NASDAQ Quote Service: Level 2

A

INSIDE QUOTE & QUOTES from market makers (guaranteed for at least 100 shares)

46
Q

NASDAQ Quote Service: Level 3

A

INSIDE QUOTE & Market Maker Quote & ABILITY TO UPDATE THEIR OWN QUOTES ON SECURITIES WHICH THEY MAKE MARKETS FOR

47
Q

How long after a market maker makes a trade does he/she have to report it?

A

30 seconds

48
Q

INSIDE MARKET

A

BEST BID and BEST ASK PRICES

SERIES 7 (13 decks)

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