In finance, the term “affirmative obligation” refers to the responsibilities of market makers working on the New York Stock Exchange (NYSE).

In finance, the term “affirmative obligation” refers to the responsibilities of market makers working on the New York Stock Exchange (NYSE). Additional practices which fall under the affirmative obligation framework of modern DMMs include: maintaining orderly trading in the opening and closing periods of the trading day; providing quotes on the best available stock prices; and overseeing processes which remove market liquidity from the market, in order to manage risk. Today, the NYSE’s market makers are known as designated market makers (DMMs). These rebates are designed to incentivize prudent and effective market-making activities, and are therefore tethered to outcomes such as the accuracy of quoted prices, the level of market liquidity, and the quality of quotes available for thinly-traded securities. In either case, the market makers of the NYSE would be required under their affirmative obligations mandate to buy or sell shares in order to maintain an orderly trading environment.

Affirmative Obligation

An agency broker is a broker that has a formal responsibility to act in the best interest of their clients.

An agency broker is a broker that has a formal responsibility to act in the best interest of its clients. An agency broker is a broker that has a formal responsibility to act in the best interest of its clients. Unlike a broker-dealer or market maker, agency brokers do not hold inventory of the securities they buy and sell. An agency broker is a broker that acts directly on behalf of their clients. What this means in practice is that the agency broker must carefully time the share purchases so that they can obtain the lowest possible price on behalf of their client.

Agency Broker Defined

An agency cross is a transaction in which an investment adviser acts as the broker for both their client and the other party in the transaction.

17 CFR § 275.206(3)-2 - Agency cross transactions for advisory clients

SEC Identifies Common Principal and Agency Cross Trading Compliance Deficiencies

Table of Contents
What Is an Agency Cross? The advisor must notify each client in writing at or before the completion of any transaction that includes a statement about the nature of the transaction, the date it happened, an offer to provide the time of the transaction, and how much they received or will receive in any remuneration, as well as its source.
The advisor must send each client an annual statement that includes the number of agency cross transactions since the last statement, as well as the total sum they received or expected to receive in remuneration. If an affiliate of the advisor, such as an associate at the same investment company or brokerage, brokers this kind of transaction, it is still considered an agency cross transaction, just as if the advisor had brokered it themselves. An agency cross is a transaction in which an investment advisor acts as the broker for both their client and the other party. Because they can be used by unscrupulous advisors, authorities keep close tabs on advisors to ensure they comply with the regulations that govern agency cross transactions.

Agency Cross

The American Code for Information Interchange (ASCII) is a type of code for data transmission. It was used in most computer systems for many years.

ASCII is a type of code for data transmission. There are two types of ASCII codes; the standard code uses a seven-bit encoding system, while the extended uses an eight-bit system. ASCII is still used for legacy data, however, various versions of Unicode have largely supplanted ASCII in computer systems today. The ASCII translates all letter characters and symbols into code that was widely used in most computer systems for many years. But the ASCII codes were used in the order-entry computer systems of many traders and brokers for years.

American Code for Information Interchange (ASCII)

An associated person is any owner, partner, officer, director, branch manager, or non-clerical or administrative employee of a broker or dealer.

In futures trading, the term "associated person" refers to particular people within the employ of a broker or dealer that perform the role of sales or supervision of sales. By requiring individuals and firms dealing with client money to register with FINRA and/ or the NFA as associated persons, if they are not already registered in other capacities, participants are subject to rules and regulations to facilitate fair markets. Separate registration with the National Futures Association (NFA) is not required for persons already registered as the following:
Futures Commission Merchant (FCM)
Introducing Broker (IB)
Floor Broker (FB)
Commodity pool operator (CPO) or a person associated with one For example, an associated person may not place personal orders ahead of clients' orders, and they cannot make information about their clients' orders available to other clients or outside parties. Associated persons, including FCMs and IBs, must satisfy minimum standards for:
Minimum net capital
Customer funds (FCMs only; IBs do not hold customer funds)
Disclosure and other requirements for customers

Associated Person

Best execution is a legal mandate that dictates brokers must seek the most favorable circumstances for the execution of their clients' orders.

Best execution is a legal mandate that requires brokers to provide the most advantageous order execution for their customers given the prevailing market environment. Best execution is a law that requires brokers to put clients’ interest first—above incentives, such as soft dollars, offered by trade routing entities.
Key factors brokers consider when executing customer orders include the opportunity for a better price than quoted, speed of execution, and the likelihood of trade execution.
Best execution is not just an ethical guideline; it is also the law. Key factors brokers consider when executing customer orders include the opportunity for a better price than quoted, speed of execution, and the likelihood of trade execution. Best execution is a legal mandate that requires brokers to provide the most advantageous order execution for their customers given the prevailing market environment. Best execution encompasses several key characteristics that brokers must examine, track, and document when choosing how to route equity, an option, or a bond order for execution.

Best Execution

Blocked period refers to a length of time in which an investor’s securities are prevented from being accessed.

Updated Investor Bulletin: Trading in Cash Accounts

Investor Bulletin: Understanding Margin Accounts

A blocked period refers to a length of time in which an investor’s securities are prevented from being accessed. If an investor with a cash account tries to purchase shares with funds that have not yet been settled from a previous trade, the brokerage firm's compliance and trade monitoring department may issue a blocked period. A blocked period may be put in place if an investor has used a security as collateral, as it prevents the investor from using the same security as collateral or from selling the security. Reasons include the investor being labeled a day trader using a margin account, or the investor using a security as collateral in a trade. Brokerages may be required to block an account for a period if the account holder buys or shares securities without having sufficient capital to complete the trade, referred to as freeriding.

Blocked Period

A block house is a brokerage firm that specializes in locating potential buyers and sellers of large-scale trades.

A block house is a brokerage firm that specializes in matching potential buyers and sellers for large-scale trades. Instead, ABC decides to work through Cantor Fitzgerald, a block house brokerage.
The trader at the hedge fund will send a message to a sales professional at Cantor Fitzgerald looking for buyers of ABC.
The hedge fund will not immediately divulge that all one million shares are for sale. Institutions seeking to avoid brokerage fees and commissions also may conduct block trades directly, without employing a block house as an intermediary, on the fourth market. That said, even well-executed block trades can significantly impact the market, and some analysts watch block trade activity to anticipate market trends. The fourth market also precludes the possibility that a block house trader will use knowledge of an impending block trade to engage in a fraudulent practice known as front running.

Block House

A board broker is a member of a commodity exchange who is responsible for matching and executing orders and providing various market-making services.

A board broker is a member of a commodity or options exchange who is responsible for matching and executing orders as well as providing various market-making services. Michaela is a board broker working for a large commodities exchange who is responsible for overseeing trade execution and market liquidity in the oil and gas futures market. Other services provided by board brokers include offering price quotations for the securities in their portfolio, particularly at the beginning and end of trading sessions or in circumstances where the security faces unusually low trading volume. Conversely, if supply outstrips demand, the board brokers may purchase the security in question in order to add liquidity to that segment of the market. Board brokers are employees of a commodities or options exchange, which fulfill a role that mixes aspects of market making and stock brokerage services.

Board Broker

In finance, the term board broker system refers to a method for managing the liquidity and orderly execution of orders on a commodity exchange.

The term board broker system refers to a method for managing the liquidity and orderly execution of orders on a commodity exchange or an options exchange. While the designated market makers (DMMs) of the NYSE may be required to provide market-making services for a particular security, board brokers on a commodities exchange are assigned specific commodities. The term board broker system refers to a method for managing the liquidity and orderly execution of orders on a commodity exchange or an options exchange. A board broker works for the commodity or options exchange and oversees a specific set of commodities or options depending on their expertise. The board broker system consists of assigning specific commodities or options to members of the exchange.

Board Broker System

A broker is an individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor.

A broker is an individual or firm that acts as an intermediary between an investor and a securities exchange. Proprietary trading firms registered as brokers may not advertise their services as brokers, but use their broker status in a way that is integral to their business. Full-service brokers offer a variety of services, including market research, investment advice, and retirement planning, on top of a full range of investment products. It is not uncommon to have a real estate broker work for a buyer, in which case, the broker is responsible for:
Locating all properties in the buyer's desired area sorted by price range and criteria.
Preparing an initial offer and purchase agreement for a buyer who decides to make an offer for a property. Many proprietary trading firms are registered as brokers so that they and their traders can access exchanges directly, however they do not offer broker services to customers at large.

Broker  and Example

A brokerage company's main responsibility is to be an intermediary that puts buyers and sellers together in order to facilitate a transaction. 

A brokerage company’s main duty is to act as a middleman that connects buyers and sellers to facilitate a transaction. A discount brokerage charges less than a traditional brokerage but may provide fewer comprehensive services and products, and lack the personal relationship found with a full-service advisor; the depth and quality of discount brokers' advice often depend on the size of an investor’s account. Some traditional, full-service brokerage companies also offer discount brokerage services and robo-advisor platforms. Some traditional, full-service brokerage companies also offer discount brokerage services or robo-advisor platforms. The amount you will pay depends on the level of services you receive, how personalized they are, and whether they involve human beings rather than computer algorithms.
Full-service brokerages, also known as traditional brokerages, offer a range of products and services including money management, estate planning, tax advice, and financial consultation.

Brokerage Company

A brokerage fee is a fee charged by a broker to execute transactions or provide specialized services.

A brokerage fee is a fee charged by a broker to execute transactions or provide specialized services. 1:23
Brokerage fees, also known as broker fees, are based on a percentage of the transaction, as a flat fee, or a hybrid of the two. The three main types of financial securities industry brokers that charge brokerage fees are full-service, discount, and online. Brokerage fees are based on a percentage of the transaction, as a flat fee, or a hybrid of the two and vary according to the industry and type of broker. Many online brokers have removed a specific commission fee for trades on stock shares, but commission fees for options or futures trades still apply.

Brokerage Fee

Brokerage supervisors are financial professionals who are responsible for overseeing one or more brokers.

Brokerage supervisors are financial professionals who oversee one or more brokers. The role of brokerage supervisors in ensuring compliance is especially important, because those supervisors can be found responsible for the conduct of their team. In addition to ensuring compliance among team members, supervisors are responsible for ongoing training of the brokers they supervise. Darlene is a brokerage supervisor working at XYZ Financial, where she supervises a team of six stock brokers. They are employed by businesses that rely on various types of brokers, such as stock brokerage companies, mortgage brokers, or real estate agencies.

Brokerage Supervisor Defined

A brokered market involves agents or intermediaries in purchase and sale transactions to facilitate price discovery and transacting the execution.

A brokered market involves agents or intermediaries in purchase and sale transactions to facilitate price discovery and transacting the execution. Once the couple decide on the place they want to purchase, they will submit an offer to their agent, which the agent will in turn show the offer to the seller's agent. In the former case, either the investor may sell his or her shares through a broker at a full-service brokerage, or online through a discount brokerage; a brokered market is used in either case, since the trade will be executed on a stock exchange. A brokered market involves agents or intermediaries in purchase and sale transactions to facilitate price discovery and transacting the execution. Brokered markets are the norm for most transactions, which can span the range from an investor selling 100 shares of a blue chip stock or a billionaire who wishes to buy a factory in a foreign country.

Brokered Market

The broker's call, also known as the call loan rate, is the interest rate charged by banks on loans made to brokerage firms.

The broker's call, also known as the call loan rate, is the interest rate charged by banks on loans made to brokerage firms. From the perspective of the margin trader, the loan originates from their brokerage firm, and the trader must ensure that they maintain adequate collateral in their account in order to ensure that their margin loan does not get called by the broker. In fact, even if a particular margin account is reasonably well funded, it may still be called back by the broker if that broker's own call loan is called by the bank. To prevent against this, the broker will closely monitor the value and collateral of the trader's margin account and will call the margin loan if they feel its risk is becoming too high. Once it received the call loan, XYZ then used the funds to supply several margin customers with loans for their margin trading accounts.

Broker's Call Defined

Bucketing is an unethical practice whereby a broker generates a profit by misleading their client about the execution of a particular trade.

Bucketing is an unethical practice whereby a broker generates a profit by misleading their client about the execution of a particular trade. Bucketing is an unethical business practice because it involves placing the broker's interests ahead of those of the client, while also misleading the client into believing that their interests are being given priority. When processing purchase orders, they will tell the client that they have purchased the shares at a specified price, whereas in fact they purchased the shares at an even lower price and kept the difference as profit for themselves. Bucketing is an unethical practice whereby a broker generates a profit by misleading their client about the execution of a particular trade. By placing their trades through the broker, the client is acting on the belief that the broker will seek out the best available terms when executing that trade.

Bucketing

A bucket shop is a brokerage firm that engages in unethical business practices.

A bucket shop is a brokerage firm that engages in unethical business practices. Historically, they would facilitate gambling on stock prices, often encouraging their clients to use dangerous levels of leverage.
Today, bucket shops are associated with so-called bucketing transactions, which involves illegally profiting from clients' trades. Specifically, it refers to firms that engage in bucketing, which is the practice of misleading clients about the actual price at which a requested transaction was executed and using this deception to profit from their trades. After mixing the tickets together, the firm would then allocate winning and losing trades to specific clients based on their assessment of which clients would likely generate the most profit for the firm. Historically, the term was used to refer to firms that allowed their customers to gamble on stock prices, often using dangerously high levels of leverage.

Bucket Shop Defined

The Buttonwood Agreement was a 1792 compact between 24 stockbrokers and merchants on Wall Street in New York City to create a stock exchange. 

How a Financial Panic Helped Launch the New York Stock Exchange

May 17, 1792: The Buttonwood Agreement and the New York Stock Exchange

Establishment of the New York Stock Exchange

From Buttonwood Agreement to theNEW YORK STOCK EXCHANGE

Table of Contents
Expand They were:
• Leonard Bleecker - 16 Wall Street
• Hugh Smith - Tontine Coffee House
• Armstrong & Barnewall - 58 Broad Street
• Samuel March - 243 Queen Street
• Bernard Hart - 55 Broad Street
• Alexander Zuntz - 97 Broad Street
• Andrew D. Barclay - 136 Pearl Street
• Sutton & Hardy - 20 Wall Street
• Benjamin Seixas - 8 Hanover Square
• John Henry - 13 Duke Street
• John A. Hardenbrook - 24 Nassau Street
• Samuel Beebe - 21 Nassau Street
• Benjamin Winthrop - 2 Great Dock Street
• John Ferrers - 205 Water Street
• Ephraim Hart - 74 Broadway The Agreement and the NYSE
The Buttonwood Agreement Signers
The Buttonwood Agreement was a written compact made in 1792 between 24 stockbrokers and merchants on Wall Street in New York City. It was written by 24 stockbrokers and merchants on Wall Street in New York City and formed the foundations of the New York Stock Exchange. To that end, two dozen merchants and brokers—the creme de la creme of the New York business/financial community—gathered on May 17, 1792, reputedly at what's now 68 Wall Street, under the shade of a buttonwood (aka a sycamore) tree to sign a written agreement they'd been discussing since March.

Buttonwood Agreement

The call money rate is the interest rate on a short-term loan that banks give to brokers who in turn lend money to investors to fund margin accounts.

The call money rate is the interest rate on a type of short-term loan that banks give to brokers, who in turn lend the money to investors to fund margin accounts. The call money rate, also known as the broker loan rate, typically isn’t available to individuals, instead, investors pay the call money rate plus a service fee on a margin account. The call money rate, also called the broker loan rate, is used to compute the borrowing rate an investor will pay when trading on margin in their brokerage account. The call money rate is the interest rate on a type of short-term loan that banks give to brokers, who in turn lend the money to investors to fund margin accounts. The investor who owns the margin account pays their broker the call money rate plus a service fee in return for using the margin capabilities offered by the broker.

Call Money Rate

A call loan rate is the short-term interest rate charged by banks on loans extended to broker-dealers.

A call loan rate is the short-term interest rate charged by banks on loans extended to broker-dealers. A call loan is a loan made by a bank to a broker-dealer to cover a loan the broker-dealer granted to a client for a margin account. The additional 2% that Broker ABC charges Bill is the margin loan rate and the profit Broker ABC makes on its loan. If the account value falls below a stated minimum (known as the maintenance margin), the broker will require the account holder to deposit more funds or liquidate position(s) to pay down the loan. Brokers seek to profit on the margin loans they make to their clients, as such, margin loan rates are typically priced at the call rate plus a premium.

Call Loan Rate

A cancellation is a notice sent by a broker to a client, informing them than an erroneous trade has been made and is being rectified.

SEC Approves New Exchange Rules for Breaking Clearly Erroneous Trades

In the context of brokerage services, a cancellation is a notice sent by a broker to a client, informing them that an erroneous trade has been made and is being rectified. Since there is less liquidity in pre-market and after-hours trading, the percentage devitations to be considered erroneous are doubled, since there is less liquidity at those times.
To start the review process, the time of the transaction, security, number of shares, price of the transaction, side (buy, sell, or both), and a statement of why the trade is considered erroneous must be submitted to the exchange. If the price of XYZ Corporation's shares were to rise prior to the trade being modified, then the brokerage firm may be required to compensate their client for the additional cost of executing the trade. For example, a trader who commits a fat finger error—entering the wrong price or quantity for a trade, such as adding an additional zero to an order—could have little to no opportunity to correct their mistake before it is executed by the near-instantaneous computerized trading system. Once they have notified the client, the brokerage firm must begin correcting the error—mainly by buying the XYZ shares the client wanted.

Cancellation

The Cantor Futures Exchange (CX Futures Exchange) is a U.S.-regulated exchange offering products covering forex, storms, and other weather products.

Back to the Future[s]: A Critical Look at the Film Futures Ban

The Cantor Futures Exchange, now called CX Futures Exchange, is a U.S. regulated exchange, regulated by the U.S. Commodity Futures Trading Commission (CFTC) that offers three brands, which are Cantor Exchange, CX, and CX Markets. The Cantor Futures Exchange, now called CX Futures Exchange, is a U.S. regulated exchange, regulated by the U.S. Commodity Futures Trading Commission (CFTC) that offers three brands, which are Cantor Exchange, CX, and CX Markets. The Cantor Futures Exchange, now the CX Futures Exchange, offers real-money trading in foreign exchange products, tropical storms, metals, and other types of weather. DBOR futures were banned due to the Dodd-Frank Act so the Cantor Futures Exchange revamped and became the CX Futures Exchange, offering financial products not readily available on other U.S. exchanges. The Cantor Futures exchange revamped and became the CX Futures Exchange, offering financial products not readily available on other U.S. exchanges.

Cantor Futures Exchange (CX Futures Exchange)

A carrying broker is a brokerage firm that provides back-office support for other brokers.

A carrying broker is a brokerage firm that provides back-office support for other brokers. The faster a carrying broker can provide accurate information regarding the transactions, margin status, and collateral level of their account holders, the more useful that carrying broker will be with respect to the client's risk management activities. Brokerage firms often rely on carrying brokers so they can focus on higher-value tasks such as onboarding new customers or providing high-touch support to existing clients. Due to economies of scale, carrying brokers can offer these services to their clients more cheaply than if brokers were to perform them internally. When dealing with especially large or valuable clients, carrying brokers will often negotiate special fees, such as waiving certain margin or transaction costs as long as specified levels of volume or assets under management (AUM) are maintained.

Carrying Broker

A clearing broker is a member of an exchange that acts as a liaison between an investor and a clearing corporation.

A clearing broker is a member of an exchange that acts as a liaison between an investor and a clearing corporation. Clearing brokers not only handle orders to buy and sell securities but they also maintain custody of an account holder's securities and other assets (such as cash in the account). Because they have custody of customer assets, carrying firms must maintain higher levels of net capital than introducing firms—and they are responsible for segregating the customer funds and securities in their custody. In this case, the introducing broker will send their clients’ cash and securities to a clearing broker to clear the trade, and the clearing broker will also maintain the customers’ accounts. Outside of clearing trades, clearing brokers are also involved in researching to confirm the information they are given is exact, and they also manage funds associated with a transaction. Once an order is executed, the clearing broker works with a clearing corporation to make sure all funds are handled and transferred properly.

Clearing Broker

Continuous Net Settlement (CNS) is an automated book-entry accounting system used by the NSCC for the clearing and settlement of securities transactions. 

National Securities Clearing Corporation (NSCC)

Continuous Net Settlement (CNS) is a settlement process used by the National Securities Clearing Corporation (NSCC) for the clearing and settlement of securities transactions. Continuous Net Settlement (CNS) is a settlement process used by the National Securities Clearing Corporation (NSCC) for the clearing and settlement of securities transactions. Continuous Net Settlement (CNS) is a settlement process used by the National Securities Clearing Corporation (NSCC) for the clearing and settlement of securities transactions. NSCC member positions in each issue are netted into a single long position and a single short position at the end of the day. NSCC member positions in each issue are netted into a single long position and a single short position at the end of the day.

Continuous Net Settlement (CNS)

COMEX is the primary futures and options market for trading metals such as gold, silver, copper, and aluminum.

COMEX is the primary futures and options market for trading metals such as gold, silver, copper, and aluminum. The COMEX does not supply metals, instead, acting as an intermediary.
Commodity Exchange Inc., the main exchange for gold futures, was first founded in 1933 through the merger of four smaller exchanges based in New York—the National Metal Exchange, the Rubber Exchange of New York, the National Raw Silk Exchange, and the New York Hide Exchange. The merger between Commodity Exchange Inc. and the New York Mercantile Exchange (NYMEX) created the world's largest physical futures trading exchange, known simply as COMEX. An investor who requests to take delivery will be given COMEX acceptable or deliverable bars, which are precious metal bars produced by COMEX-approved refiners and created to strict standards set by COMEX. Formerly known as the Commodity Exchange Inc., COMEX merged with the New York Mercantile Exchange (NYMEX) in 1994 and became the division responsible for metals trading.

COMEX

A commission broker is an employee of a brokerage company who gets remunerated for the number of trades they execute.

A commission broker is an employee of a brokerage company who gets remunerated for the number of trades they execute. Tying a commission broker's earnings to the level of business a customer does can often lead to unethical practices, such as churning, whereby a broker trades excessively in a client's account just to generate commissions. A broker who charges a flat fee for their services rather than earning a commission based on order size has more incentive to put the customer's best interest first because they earn the same amount regardless of how much business that client does. When a customer pays a commission to buy or sell a security, it gets split between the brokerage company and the commission broker. For example, a dishonest commission broker may engage in a practice called churning, which means they execute multiple trades in a customer's account for the sole purpose of generating more commissions.

Commission Broker

A commission house is a brokerage that buys and sells financial assets for investors and charges fees for doing so.

The Six Variable Annuity Fees You Need To Know About

The Differences Between Classes A, B, and C Mutual Funds

The term commission house refers to a service provider that buys and sells different types of assets. Unlike self-directed brokerages that allow their customers to place trades on their own and pay nominal fees, full-service providers like commission houses often charge heavy fees and commissions. Load mutual funds are those that come with commissions or sales charges that pay the intermediary, which is the commission house, rather than the fund company. High fees charged by commission houses are commonly seen through annuities and load mutual funds. These funds come in three different variations:
An investor pays a transaction fee upfront at the time of purchase for an A-load fund.

Commission House

A contra broker is a broker that is taking the opposite side of a transaction initiated by another broker.

A contra broker is a broker that is taking the opposite side of a transaction initiated by another broker. For example, in a transaction in which a broker wishes to sell securities to another broker, the buyer would be a contra broker for the purposes of that transaction. Maintaining such trading relationships is also essential when trading large blocks of securities and in cases where the broker initiating the transaction does not want to reveal the true size of the position to any one contra broker. For brokers initiating large transactions, it can be useful to work with multiple contra brokers in order to make the transaction less visible to other market participants. A contra broker is a broker that is taking the opposite side of a transaction initiated by another broker.

Contra Broker Defined

A cross is when a broker receives a buy and sell order for the same stock at the same price, so they make the trade between two separate customers. 

The term "cross" has three primary definitions in finance: A golden cross indicates a long-term bull market going forward, while a death cross signals a long-term bear market. 3.  A cross may also refer to a technical analysis chart pattern, such as a golden cross or death cross. 1.  The first type of cross is when a broker receives a buy and sell order for the same stock at the same price, and subsequently makes a simultaneous trade between two separate customers at that price. If a stockbroker receives separate orders to buy and sell at the same price at the same time, he must offer the stock in the market at a higher price than the bid.

What Is a Cross?

The Coffee, Sugar and Cocoa Exchange (CS&CE) was a commodities exchange established in September 1979 to facilitate futures trading.

Amendments to Exchange Bylaw Annexes and Rules Related to the Discontinuance of Open Outcry Trading on the Exchange

IntercontinentalExchange to Acquire NYSE Euronext for $33.12 per Share in Stock and Cash, Creating Premier Global Market Operator

The Coffee, Sugar and Cocoa Exchange (CS&CE) was a commodities exchange established in September 1979 to facilitate commodity futures trading. The Coffee, Sugar and Cocoa Exchange merged with New York Cotton Exchange in June 2004, with the combined entity then known as the New York Board of Trade (NYBOT).﻿﻿ The exchange merged with the New York Coffee & Sugar Exchange in 1979 to form the Coffee, Sugar, and Cocoa Exchange. The Coffee, Sugar, and Cocoa Exchange (CS&CE) was a New-York based commodities futures exchange established in 1979, but with its roots dating back to the 19th century. The Coffee, Sugar and Cocoa Exchange (CS&CE) was a commodities exchange established in September 1979 to facilitate commodity futures trading.

Coffee, Sugar and Cocoa Exchange (CSCE)

Daily Average Revenue Trade (DART) is a metric used in the brokerage industry which represents average trades per day that generate commissions, fees, or payments for order flow in some cases.

E*Trade Financial Investor Presentation July 2020

The Charles Schwab Corporation Recent Client Trading Activity Report: Nov. 8, 2019

The trend toward zero-commission trading led brokerages to adopt different definitions of DART, with some maintaining traditional DARTs and others switching to expanded DARTs. In 2019, E\*TRADE decided to expand its definition of DARTs to include all trades that generate payment for order flow, commissions, or fees. In 2019, E\*TRADE decided to expand its definition of DARTs to include all trades that generate payment for order flow, commissions, or fees. However, some brokerages expanded the definition of DART to include many commission-free trades as zero commissions became the norm in 2019.

Daily Average Revenue Trades (DARTs)

The Dalian Commodities Exchange is a commodities exchange based in Dalian, China.

Among its lesser-known traded commodities, the exchange trades: linear low-density polyethylene, polypropylene, palm oil futures, eggs, fiberboard, soybeans, soybean meal, soybean oil, genetically modified soybeans, soybean meal options futures, rice, and corn. The exchange has the largest volume of any commodities exchange in China, in part due to the fact that the exchange is an important venue for the circulation of soybeans grown in mainland China. The Dalian Commodities Exchange (DCE) is located in Dalian, China, and trades futures contracts on a wide variety of commodities. In 2013, the Dalian Commodities Exchange expanded from its role as an agricultural commodities exchange to include industrials, such as iron ore and coke coal.

Dalian Commodities Exchange

A dealer market is a financial market mechanism wherein multiple dealers post prices at which they will buy or sell a specific security of instrument. 

A dealer market is a financial market mechanism wherein multiple dealers post prices at which they will buy or sell a specific security or instrument. In a dealer market, a dealer – who is designated as a “market maker” – provides liquidity and transparency by electronically displaying the prices at which it is willing to make a market in a security, indicating both the price at which it will buy the security (the “bid” price) and the price at which it will sell the security (the “offer” price). A dealer market is a transparent financial market mechanism in which multiple dealers post the prices they are willing to buy or sell a specific security. A dealer market is a financial market mechanism wherein multiple dealers post prices at which they will buy or sell a specific security or instrument. The differences between broker and dealer markets also include:
Brokers execute a trade on behalf of others, while dealers execute trades on their own behalf.
Brokers buy and sell securities for their clients, but dealers buy and sell on their own accounts.

Dealer Market

A deck is the number of open orders that a broker is working with.

NYSE resumes trading after unprecedented shutdown

A deck, also known as a broker's deck, is the number of open orders that a broker is working with at any one time. Another example would be if the broker has a buy order in company A with a limit of 82.50 for a customer and a sell order for company A hits the broker's deck with a limit of 82.48, the broker will cross the orders mid-market at 82.50 when the quote is inline. By crossing an order, transaction costs are lower for the broker relative to working the orders on the screen (exchange).
Based on the availability of certain securities on multiple exchanges and the growing dependency on technology in the trading arena, a broker with a large deck may experience more missed opportunities in the event a technical issue shuts down an exchange. A deck, also known as a broker's deck, is the number of open orders that a broker is working with at any one time. A floor trader works with orders, referred to collectively as a deck, received from clients requesting certain securities be bought or sold.

Deck

A deep discount broker handles buys and sales of securities for customers on exchanges at even lower commission rates than regular discount brokers.

A deep discount broker is an agent who mediates trades on exchanges between securities buyers and sellers at even lower commission rates than those offered by a traditional discount broker. As one might expect, deep discount brokers also provide fewer services to clients than standard brokers; such brokers typically provide little more than the fulfillment of stock and option trades, charging a flat fee for each.
Today, many discount brokers have essentially become deep discount brokers in that stock and ETF trading commissions have tended toward zero. For example, a client may pay $150 or even $200 per trade with a full-service broker, while the same trade would cost between $5 and $10 online with a discount broker and $1.00 or even $0 with a deep discount broker. The deep discount broker only offers execution of orders at the low price of $1 per trade vs. $35 per trade at the full-service broker. A deep discount broker is an agent who mediates trades on exchanges between securities buyers and sellers at even lower commission rates than those offered by a traditional discount broker.

Deep Discount Broker

A demo account is a trading account that allows an investor to test the features of a trading platform before funding the account or placing trades.

A demo account is a type of account offered by trading platforms that is funded with fake money, enabling a prospective customer to experiment with the trading platform and its various features before deciding to set up a real account. A demo account is a type of account offered by trading platforms that is funded with fake money, enabling a prospective customer to experiment with the trading platform and its various features before deciding to set up a real account. Demo accounts are offered by a wide variety of online trading platforms, including stock trading platforms, foreign exchange trading venues, and commodities exchanges. A demo account is a type of account offered by trading platforms that allows a prospective customer to experiment with the trading platform before putting in real money. Demo accounts are used by stock trading platforms, foreign exchange trading venues, and commodities exchanges.

Demo Account

A deposit broker is a person or company tasked with placing financial deposits at a depository institution on behalf of a third party.

General Securities Representative Qualification Examination (Series 7) Content Outline

Guidance on Identifying, Accepting, and Reporting Brokered Deposits

Table of Contents
What Is a Deposit Broker?
Understanding a Deposit Broker
What Does a Deposit Broker Sell? Deposit Brokers sell brokered deposits—usually, large-denomination deposits first sold by a bank to a brokerage or deposit broker—who then divide them into smaller pieces for sale to customers. Brokered deposits are one of two types of deposits that comprise a bank's deposit liabilities; the second one is core deposits. The term deposit broker often refers to an individual or firm that facilitates the placement of investors' deposits with insured depository institutions. A deposit broker is a person, company, or organization tasked with placing financial deposits at an insured depository institution on behalf of a third party.

Deposit Broker

A direct-access broker is a stockbroker that concentrates on speed and order execution—unlike a full-service broker focused on research and advice.

A direct-access broker is a stockbroker that concentrates on speed and order execution—unlike a full-service broker that focuses on investment research and advice. Direct-access brokers have become very popular among active traders because of their speedy transaction times, but other services such as streaming quotes, interactive charts, Level II Nasdaq quotes and other real-time features have also contributed to this success. Direct-access brokers have become very popular among active traders because of their speedy transaction times, but other services such as streaming quotes, interactive charts, Level II Nasdaq quotes and other real-time features have also contributed to this success. Sophisticated institutional investors with in-house research teams might not want to pay for full-service execution which includes research and trading ideas. Sophisticated institutional investors with in-house research teams might not want to pay for full-service execution which includes research and trading ideas.

Direct-Access Broker

The Depository Trust Company IPO Tracking System enables underwriters to track purchases and sales of shares issued in an IPO, and identify flippers.

As its name suggests, the Depository Trust Company IPO Tracking System is a system, administered by the Depository Trust Company, that is designed to monitor the purchase and sale of securities that have recently been issued through an initial public offering (IPO).
One of the principal uses of the system is to identify instances were insiders have sold their shares shortly after the IPO. As its name suggests, the Depository Trust Company IPO Tracking System is a system, administered by the Depository Trust Company, that is designed to monitor the purchase and sale of securities that have recently been issued through an initial public offering (IPO).
One of the principal uses of the system is to identify instances were insiders have sold their shares shortly after the IPO. By monitoring all purchases and sales of securities that have been issued through a recent IPO, the tracking system allows underwriters to review reports of IPO-related share movements, thereby identifying which investors chose to flip their shares. Although underwriters rely on some insiders selling their shares in order to make those shares available to retail investors, they also wish to avoid a situation where insider selling places downward pressure on the market price of the newly issued security. Thankfully, the Depository Trust Company IPO Tracking System provides a means for underwriters to verify whether these promises have in fact been kept.

Depository Trust Company IPO Tracking System Defined

An excess margin deposit is the collateral held in a margin account that is in excess of the level required to maintain that account's good standing.

7500 - FRB Regulations, Part 220—Credit by Brokers and Dealers (Regulation T)

An excess margin deposit is the collateral held in a margin account that is in excess of the minimum level required to maintain that account's good standing. In the United States, Regulation T of the Federal Reserve governs the initial deposits necessary to establish a margin trading account.﻿﻿﻿ Similarly, the Financial Industry Regulatory Authority (FINRA) is responsible for regulating margin maintenance requirements, which are the minimum levels of collateral required in margin accounts.﻿﻿﻿ An excess margin deposit is the collateral held in a margin account that is in excess of the minimum level required to maintain that account's good standing. The value of collateral in a margin trading account that exceeds these regulatory requirements is known as the account's excess margin deposit. In margin trading, the excess margin deposit is the difference between the current value of an account and its minimum maintenance requirement.

Excess Margin Deposit Defined

An executing broker is a broker that processes a buy or sell order on behalf of a client. They are often associated with hedge funds.

An executing broker is a broker or dealer that processes a buy or sell order on behalf of a client. For retail customers, the order sent to an executing broker is first assessed for appropriateness (automated through parameters for a particular client), and if the order is accepted, the executing broker will then immediately carry out the order. An executing broker is a broker that processes a buy or sell order on behalf of a client, usually at a hedge fund. An executing broker is a broker or dealer that processes a buy or sell order on behalf of a client. Lastly, the broker may try to fill the order from its own inventory by selling a stock that the broker's firm owns or taking in stock on its books that a customer wants to sell.

Executing Broker

Execution-only is a brokerage model that only involves taking orders and executing them, without any further services such as research, banking, or advice.

Execution-only is a trading service that is restricted to only the execution of trades, without the client receiving any advice about the merits or risks of the investments or their suitability. However, traders should be aware of the risks of over-trading, which can lead to potentially steep losses that more than offset the low cost of trading through an execution-only service. Execution-only is a trading service that is restricted to only the execution of trades, without the client receiving any advice about the merits or risks of the investments or their suitability. For retail investors, these execution-only services offer a very economical trading platform, and many of them offer stock trades for single-digit dollar commissions. Although they do not provide the kind of advice or recommendations offered by full service brokers, many execution-only services that are subsidiaries of larger financial institutions do make some investment research from their parent companies available to their clients.

Execution-Only

A fee-based investment refers to how a financial advisor is compensated, in particular, the ability to earn a commission by selling a product.

Because of how they're paid, fee-based advisors may have a greater incentive to offer fee-based investments, even if they don't serve the client's best interests.
Fee-based investments are different from fee-only investments—advisors who sell the latter are only paid a fee.
The term fee-based is often used to describe a hybrid advisor or a dually registered advisor. While fee-based advisors collect both fees and commissions from fee-based investments, fee-only advisors are only compensated for the services they provide to their clients through a series of fees. The term fee-based investment refers to a product offered by an investment company, bank, or other institution where the financial professional is compensated through a fee as well as a commission for selling the investment vehicle. As such, prospective fee-based investors would be well-served by asking financial professionals the following questions to be sure of exactly what to expect from a fee-based advisor:
What are your professional qualifications and what is your educational background as it relates to dispensing financial advice?

Fee-Based Investment

A fictitious trade is a trade that is booked with an execution date far in the future, and adjusted to include the correct settlement and trade date when the transaction is completed.

UBS 'rogue' trader Kweku Adoboli jailed for seven years

A fictitious trade is a trade that is booked with an execution date far in the future and is adjusted to include the correct settlement and trade date when the transaction is completed. A fictitious trade is a trade that is booked with an execution date far in the future and is adjusted to include the correct settlement and trade date when the transaction is completed. The first is a cash transaction with a settlement date (the same as the trade date); the second transaction has the same trade date, but with a settlement date for several weeks later. His underlying positions were disguised by employing late bookings of real trades, booking fictitious trades to internal accounts, and the use of fictitious deferred settlement trades in the British Financial Services Authority (FSA). Later on, the trade is adjusted to include the correct settlement and trade date when the transaction is completed.

Fictitious Trade

FINRA BrokerCheck is a free, online tool that helps individuals research brokers, brokerage firms, investment adviser firms and advisers. 

FINRA BrokerCheck is a free, online tool that helps individuals research brokers, brokerage firms, investment adviser firms and advisers. For brokerage firms, BrokerCheck provides:
A report summary of a firm and its background
A firm profile describing a firm's origins, its leadership, and who owns it
A firm history of acquisitions, mergers or name changes
A firm operations section that includes its licenses and registrations, what kind of business it engages in, and any other operational disclosures
A disclosures section that has information of arbitration awards, disciplinary events, and financial matters on its record (both past and pending).
BrokerCheck does not contain any information that has not been disclosed to the CRD system, some personal or confidential information (Social Security numbers or residential addresses), as well as satisfied judgments or liens. Regarding brokers who are currently registered with FINRA, a national securities exchange, or who have been registered sometime during the last 10 years, FINRA BrokerCheck provides:
A report summary of a broker and their credentials
Broker qualifications, such as current registrations or licenses, including exams that they have passed
Registration and employment history that includes a list of securities firms a broker is registered or was previously registered, as well as an employment history going back 10 years (both within and outside the industry).
Disclosures regarding criminal, regulatory, civil judicial, or customer complaint activity The data and information available in BrokerCheck comes mainly from two sources: the Central Registration Depository (CRD), the securities industry online registration and licensing database, provides the broker and brokerage information, while information about investment adviser firms and representatives comes from the Securities and Exchange Commission's Investment Adviser Registration Depository (IARD) database. Given the breadth of its data sources, FINRA BrokerCheck (brokercheck.finra.org) contains information on roughly 820,000 brokers/brokerages and advisers/adviser firms, as well as thousands of previously registered ones.

FINRA BrokerCheck

A firm quote is a bid to buy or offer to sell a security or currency at the firm bid and ask prices, that is not subject to cancellation.

A firm quote is a bid to buy or offer to sell a security or currency at the firm bid and ask prices, that is not subject to cancellation. For example, if a market maker posts a firm bid of $25 for 10K, this tells other dealers or traders that the market maker will buy 10,000 shares for a price of $25. A firm quote is a bid to buy or offer to sell a security or currency at the firm bid and ask prices, that is not subject to cancellation. Generally speaking, when a block is being priced up by a market making desk, the price quoted is determined by a culmination of many factors including: asset liquidity, event risks, positioning, and market news among other things. Failure by a market maker to honor the quoted bid and ask prices for a minimum quantity is a serious violation of industry regulations, known as backing away.

Firm Quote

A floor broker, also known as a "pit broker," is an independent member of an exchange who is authorized to execute trades on the exchange floor.

A floor broker, also known as a "pit broker," is an independent member of an exchange who is authorized to execute trades for clients on the exchange floor. Although floor brokers historically relied primarily on written notes, their famous hand gestures, and verbal communication in order to make their trades, known as open outcry, today they also use an array of handheld and stationary computers in order to receive and transmit trade orders while working on the trading floor. Floor brokers are regulated by the exchanges they work for and the Securities and Exchange Commission (SEC).
Floor brokers are often seen in media depictions of trading at the major exchanges, especially when notable market events are occurring, such as a popular initial public offering (IPO) or a dramatic market crash. As of 2020, floor brokers are relatively few in number, with only 22 firms maintaining floor brokers at the NYSE, as compared to several hundred firms in previous decades. The New York Stock Exchange (NYSE) floor brokers are known for the iconic blue jackets which they wear on the trading floor.

Floor Broker

Form T is an electronic form that FINRA requires brokers to use for reporting equity trades executed outside of normal market hours.

FINRA Reminds Firms of their Trade Reporting Obligations and Announces New Submission Process for Form T

Form T is an electronic form that FINRA requires brokers to use for reporting equity trades executed outside of normal market hours. Large blocks of shares may not all be sold in a single day, so a broker or market maker would file a Form T for the remainder of shares listed at the average price that day's shares sold for as if they all had sold. Form T is an electronic form that FINRA requires brokers to use for reporting equity trades executed outside of normal market hours. Form T must also be used to submit last sale reports of over-the-counter (OTC) transactions in equity securities, for which electronic submission is not possible. Form T is also used to submit last sale reports of OTC transactions in equity securities, for which electronic submission is not possible.

Form T

Front-running is trading stocks or any asset based on insider knowledge of a future transaction that will affect its price. It is illegal in most cases.

Front-running is trading stock or any other financial asset by a broker who has inside knowledge of a future transaction that is about to affect its price substantially. Here's a straightforward example of front-running: Say a broker gets an order from a major client to buy 500,000 shares of XYZ Co. A broker may also front-run based on insider knowledge that their firm is about to issue a buy or sell recommendation to clients that will almost certainly affect the price of an asset. Front-running is similar to insider trading, with the minor difference in this case that the broker works for the client's brokerage rather than inside the client's business.

Front-Running

A full-service broker is a broker that provides a large variety of services to its clients, including research and advice, retirement planning, and more.

A full-service broker is a licensed financial broker-dealer firm that provides a large variety of services to its clients, including research and advice, retirement planning, tax tips, and much more. Stockbrokers are more geared towards providing securities products and transaction-based services, whereas financial advisors cover a broader range of services that include estate planning, financial planning and budgeting, insurance products and even tax advice. A full-service broker is a licensed financial broker-dealer firm that provides a large variety of services to its clients, including research and advice, retirement planning, tax tips, and much more. Full-service brokers can provide expertise for people who don't have the time to stay up-to-date on complicated issues such as tax or estate planning; however, for those who just want to execute trades without the extra services, discount brokers are the way to go. Full-service brokers offer customized support and interaction in facilitating trades, managing portfolios, financial planning, and wealth management services for clients.

Full-Service Broker

Give up is a procedure in securities or commodities trading where an executing broker places a trade on behalf of another broker. Often this type of trade happens if work or other obligations prohibit the actions of the original broker to complete the transaction.

Give up is a procedure in securities or commodities trading where an executing broker places a trade on behalf of another broker. These parties include the executing broker (Party A), the client's broker (Party B), and the broker taking the opposite side of the trade (Party C). A request is made of Party A to place the trade on behalf of Party B to ensure the timely execution of a trade. On the record books, or trade log, a give-up trade shows the information for the client's broker (Party B). Floor Broker A places the trade, he must give up the transaction and record it as if Broker B made the trade.

Give Up

A house call is a brokerage firm's demand that a customer cover a shortfall in the amount deposited to cover losses in purchases made on margin.

Margin: Borrowing Money to Pay for Stocks

A house call is a demand by a brokerage firm that an account holder deposit enough cash to cover a shortfall in the amount of money deposited in a margin account. Fidelity Investments, for example, has a margin maintenance requirement of 30%, and its house call allows an account holder five business days to sell margin-eligible securities or deposit cash or margin-eligible securities. A house call is a demand by a brokerage firm that an account holder deposit enough cash to cover a shortfall in the amount of money deposited in a margin account. A house call is a brokerage house demand that an investor restore the minimum required deposit in order to offset losses in the value of assets bought on margin. When a house call is issued, the account holder must meet the margin maintenance requirement within a stated period.

House Call

A hybrid market is an exchange through which traders can use automated trading systems and traditional floor brokers in order to execute transactions.

A hybrid market is an exchange through which traders can use both automated trading systems and traditional floor brokers in order to execute transactions. Today, human floor trading is mainly utilized by large institutional investors, who rely on the human judgment of floor brokers when placing large and complex trades. Hybrid markets offer market participants the option to choose between human floor brokers, who execute transactions on the physical trading floor, and fully automated electronic exchange systems. A hybrid market is an exchange through which traders can use both automated trading systems and traditional floor brokers in order to execute transactions. The NYSE, one of the world's oldest and most prominent stock exchanges, operated for most of its history using human trade brokers on its physical trading floor.

Hybrid Market Defined

The Institutional Brokers' Estimate System (IBES) is a database of stock analyst research and recommendations used by traders and active investors.

Thomson Reuters I/B/E/S Key Performance Indicators

The Center for Research in Security Prices

The Institutional Brokers' Estimate System (IBES) is a database used by brokers and active investors to access the estimates made by stock analysts regarding the future earnings of publicly traded American companies. These include estimates of revenue, earnings per share, price targets, net debt, enterprise value, and net income, among other factors.
Users can break down data by year, by fiscal quarter, and by other timeframes that are used to measure and anticipate a company’s performance.
IBES is designed to be a centralized system to assist decision-making about securities.
The database includes recommendations from the analysts on whether to buy, hold, or sell shares in the public companies they cover. For example, IBES guidance data and earnings estimates are available to academics at the Wharton School of the University of Pennsylvania to review and evaluate expectations for companies.﻿﻿ An IBES historical database The Institutional Brokers' Estimate System (IBES) is a database used by brokers and active investors to access the estimates made by stock analysts regarding the future earnings of publicly traded American companies. IBES is a database of analyst estimates and company guidance for 22,000 public companies.

Institutional Brokers' Estimate System (IBES):

Instinet is a global financial securities service that operates an electronic securities order matching (trading) and information system. 

2016 H1 European Cash Equity and ETF Broker Rankings

Rapidly Changing Securities Markets: Who Are the Initiators

Reuters Subsidiary Instinet's IPO Priced At $14.50 Per Share - Market Capitalisation $3.5 Billion

Nomura Closes Instinet Acquisition, Announces New Board of Directors

Nomura Announces Evolution of Global Equities Franchise

Instinet is a global financial securities service that operates an electronic securities order matching (trading) and information system. In February 2007, Nomura purchased the company from private equity firm Silver Lake for a reported $1.2 billion.﻿﻿ As of 2020, Instinet is operated as an independent subsidiary of Nomura and run by CEO Ralston Roberts.﻿﻿ In May 2012, Nomura announced that it would transfer electronic trading in the United States to Instinet, with the goal of eventually making it the electronic trading arm for all of Nomura. Instinet is Wall Street's oldest electronic communications network, and after it was acquired by Reuters Group in 1987, it and other electronic communications networks evolved into major threats to the established stock exchanges.﻿﻿ The company split its electronic communications network and its brokerage business into Inet ECN and Instinet, respectively, in 2003. Headquartered in New York, the company provides sales trading services and trading technologies such as the Newport EMS, algorithms, trade cost analytics, commission management, independent research, and dark pools of liquidity. However, in September 2012, Nomura announced that it would instead make Instinet its execution services arm (cash, program, and electronic trading) in all markets globally, excluding Japan.

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