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30 Cards in this Set
- Front
- Back
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Market Order
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is the default; it is an order to buy or sell securities at the current market price, and it will be filled as long as there is a market for the security
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Lmited Order
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is an order to buy or sell securities at a specified price. A limit order, unlike a market order guarantees a price but not an execution. An investor who places a limit order to purchase a stock is setting a maximum price that they are willing to pay to buy the shares. In the case of an order to sell shares a limit order sets the minimum amount the investor will accept for the shares |
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Stop Order
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is an order either to buy a stock at the market price when the price rises to a certain level, or to sell a stock at the market price when the price falls to a certain level
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Stop Limited order
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similar to a stop order, but it becomes a limit order, rather than a market order, when the security trades at the price specified on the stop
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Day Order
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expires at the end of the day
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Good- till canceled ( GTC) Or Open Orders |
remains in effect until it is either filled or canceled These orders must be renewed at least twice a year - no later than the end of April and end of October |
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All-or-none orders
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market or limit orders that must be executed in their entirety or not at all. AON orders may be entered as day orders or as GTC orders
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Fill-or-kill orders
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must be executed immediately and in their entirety or else the order is cancelled.
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Immediate-or-cancel (IOC) orders
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market or limit orders that are to be executed immediately in whole or in part, and any portion that cannot be executed as soon as the order hits the trading floor is cancelled.
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Not-held (NH) orders
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market or limit orders in which the customer gives the trader or floor broker time and price discretion; this qualifier, does not hold the broker responsible for missing the best price.
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Filling Out the Order Ticket
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the ticket must specify the following information: 2. If a sell, "short" or "long" 3. Account number 4. Type of account 5. Security's ticker symbol 6. Quantity of shares 7. Type of order 8. Account executive ID number 9. Discretion qualifiers, if any |
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Identifying Orders and Short and Long
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The investor owns the stock and wants to sell it; what matters here is not whether she is selling at a profit or dumping an underperformer, but rather that she does in fact own the shares.
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Super Display Book system (SDBK)
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NYSE member firms have the option to send orders electronically from the floor directly to the specialist through a system * SDBK transmits member firms' market orders and day limit orders - up to specified sizes in virtually all listed stocks - to the proper trading floor workstation through the common message switch. * Specialists receiving orders through SDBK execute them at their posts in the trading crowd as quickly as market interest and activity permit, and return reports to the originating firm's offices via the same electronic circuit. |
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Confirmation
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Confirmation can also refer to a broker's written acknowledgment that a trade has been completed. These can be in electronic or paper form, and record information such as the date, price, commission, fees and settlement terms of the trade. |
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Good Delivery
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assurance that a security meets all the standards required to transfer title to the buyer.
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two ways to buy securities
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primary market & secondary market |
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primary market
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issues new securities on an exchange for companies, governments and other groups to obtain financing through debt-based or equity-based securities Primary markets are facilitated by underwriting groups consisting of investment banks that set a beginning price range for a given security and oversee its sale to investors |
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Secondary Market
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investors buy and sell securities they already own. It is what most people typically think of as the "stock market"
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Primary vs. Secondary Markets
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a company issues stock or bonds for the first time and sells those securities directly to investors, that transaction occurs on the primary market secondary market occur between investors, and the proceeds of each sale go to the selling investor, not to the company that issued the stock or to the underwriting bank. |
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Are mutilated certificates ever considered good delivery?
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The answer is yes, only if authenticated by the issuer\'s transfer agent
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When, As, and If Issued (WI)
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A trade is done on WI because there are no physical certificates available reflecting the securities being traded, so a delivery date cannot be determined at the time of execution.
The coupon rate on a bond is not finalized until the offering date, and the exact price and initial public offering date of a stock often are not determined until the bulk of the buyers are already lined up. In either event, the securities trade WI until all details are settled and the offering date arrives. A "when issued" settlement date is established through contact with the company or its agent, which determines that there is a sufficient market for the securities to be issued. |
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Regular-way (RW)
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trades settle on the third business day after the transaction. That is, if you buy a stock for a client on a Tuesday, you must have the cash to pay for it by Friday; similarly, the investor selling the stock must have it ready for good delivery by that Friday |
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Ex-dividend trades
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relate to stocks upon which a dividend has been declared but not yet distributed. When an investor buys on and after the ex-dividend date, or ex-date, he is not entitled to receive the dividend, and the terms of the trade are said to be ex-dividend. For most dividends, the ex-date is two business days before the record date, the day on which the company's transfer agent compiles a list of those persons with shares registered in their names. |
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Settling Equity Options
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On the CBOE, where equity options are traded, settlement rules are different. * Once the OCC receives your client's exercise notice, it assigns it to a clearing member firm with a customer who has written an uncovered option with the same terms. The member firm makes these assignments either randomly or on a FIFO basis. If an option writer is short an option that expires in-the-money, she can count on getting an assignment on that contract. Once assignment has been received, she has no choice but to deliver on it |
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Federal government securities are settle
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Fixed Income Clearing Corporation (FICC * Successfully compared trades result in binding and enforceable obligations for settlement. * Unmatched trades may be revised to achieve a trade match. Once Treasury securities' net positions are determined, FICC interposes itself between the original trading parties and becomes the legal counter-party for settlement purposes; much like the OCC does in the options market. For those agencies issuing mortgage-backed securities, the FICC engages in multilateral position netting and does not stand in the middle of transactions. In either case, final settlement is done through the Federal Reserve's Fedwire Securities Service and the participants' banks. |
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DK Procedures
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indicates the firms do not agree on the terms and conditions of a transaction.
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broker-dealer must keep the following records for six years
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All receipts and disbursements of cash and all other debits and credits Ledgers reflecting all assets, liabilities, capital, income and expenses All purchases, sales, receipts and deliveries of securities and commodities for each account, and all other debits and credits to each account A securities record or ledger reflecting positions carried on the broker-dealer's own account as well as those on its clients' accounts
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broker-dealer must keep these records for three years
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All guarantees of accounts and all powers of attorney and other evidence of the granting of any discretionary authority, and copies of resolutions empowering an agent to act on behalf of a corporation
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file of customer complaints and their disposition
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broker-dealer has to maintain in perpetuity
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statements
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account showing security and money positions and entries at least quarterly to all accounts having any kind of activity during the preceding quarter.
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