Sec 4: trading on an exchange

_____ is the key individual on an exchange trading floor.

The Designated Market Maker

The DMM is required to maintain a ____ and ____ market in the securities’ assigned to him or her.

fair and orderly

The DMM may act as a ____ and a ______.

broker and a dealer

A ____ executes orders for other members and receives a commission, acting in a ___ capacity.

broker, agency

A ____ buys and sells for or from the firm’s own acct, acting in a ____ capacity.

dealer, principal

The DMM can accept these three orders:

1. market orders

2. day orders

3. open orders

____ orders are not handled by the DMM.

Not held

A broker matches up customers who want to ___ and customers who want to _____.

buy, sell

The DMM can contact _____ if there is an influx of sell orders.

potential buyers

The DMM does not participate in the distribution of ______.

New issues

The DMM participates in the ____ market.

Secondary

Dmm execute _____ orders, although they are not reported to the tape.

Odd lot

_____ is when a DMM guarantees a floor broker a specific price on a fixed number of shares for a limited period of time.

Stopping Stocks

Stopping stock is done for _____ only.

NYSE

The _____ permission is NOT required with a stopping stock.

floor governors

When a DMM stops stock the price is ______.

guaranteed

When a DMM stops stock the order must be solicited by the _____.

Floor broker

When a DMM stops stock there must be a _____ (difference between the _____ and ____ price) in the quote of at least ___ cents.

spread, bid and ask, 2

If a DMM bids for or offers stock for the DMMs own account, the DMM must bid at a price ____ any order on the book to ___ and offer at a price ____ any offer to ____ on the book. DMM’s cannot compete against customer orders on the book.

above, buy, below, sell