Module 1: Market Organisation and Structure

Accelerated book build

An offering of securities by an investment bank acting as principal that is accomplished in only one or two days.

Allocationally efficient

A characteristic of the market, a financial system, or an economy that promotes the allocation of resources to their highest value uses.

All-or-nothing (AON) orders

An order that includes the instruction to trade only if the trade fills the entire quantity (size) specified.

Alternative investment markets

Market for investments other than traditional securities investments (i.e., traditional common and preferred shares and traditional fixed income instruments). The term usually encompasses direct and indirect investment in real estate (including timberland and farmland) and commodities (including precious metals); hedge funds, private equity, and other investments requiring specialised due diligence.

Alternative trading systems

Trading venues that function like exchanges but that do not exercise regulatory authority over their subscribers except with respect to the conduct of the subscribers’ trading in their trading systems. Also called electronic communications networks or multilateral trading facilities

American-style

Type of option contract that can be exercised at any time up to the option’s expiration date.

Arbitrageurs

Traders who engage in arbitrage.

Ask

The price at which a dealer or trader is willing to sell an asset, typically qualified by a maximum quantity (ask size).

Ask size

The maximum quantity of an asset that pertains to a specific ask price from a trader.

Behind the market

Said of prices specified in orders that are worse than the best current price; e.g., for a limit buy order, a limit price below the best bid.

Best bid

The highest bid in the market.

Best effort offering

An offering of a security using an investment bank in which the investment bank, as agent for the issuer, promises to use its best efforts to sell the offering but does not guarantee that a specific amount will be sold.

Best offer

The lowest offer (ask price) in the market.

Bid

The price at which a dealer or trader is willing to buy an asset, typically qualified by a maximum quantity.

Bid size

The maximum quantity of an asset that pertains to a specific bid price from a trader.

Block brokers

A broker (agent) that provides brokerage services for large-size trades.

Book building

Investment bankers’ process of compiling a “book” or list of indications of interest to buy part of an offering.

Broker

An agent who executes orders to buy or sell securities on behalf of a client in exchange for a commission.

Broker-dealer

A financial intermediary (often a company) that may function as a principal (dealer) or as an agent (broker) depending on the type of trade.

Brokered market

A market in which brokers arrange trades among their clients.