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Soru

Zorluk: OrtaTypes of Markets and Trading Venues

An institutional pension fund executes a direct trade of a large block of exchange-listed stock with another institutional investor via an automated electronic network without using a broker-dealer firm as an intermediary. In which of the following market segments did this transaction take place?

  1. Fourth MarketCevap
  2. B
    Primary Market
  3. C
    Third Market
  4. D
    National Securities Clearing Corporation

Cevap

The Fourth Market
The transaction described took place in the Fourth Market. The Fourth Market refers specifically to direct trades executed between institutional investors (such as pension funds, insurance companies, and mutual funds) using Electronic Communication Networks (ECNs) without the assistance or intermediary services of a broker-dealer.

Adım Adım Çözüm

1
Identify the trading participants and execution channel described in the scenario.
The transaction takes place directly between two institutional investors via an automated network, bypassing broker-dealer intermediaries.
Market segments in the secondary market are categorized by their execution mechanism and whether financial intermediaries participate.
2
Map the execution channel to standard secondary market segment definitions.
Direct institution-to-institution trading via Electronic Communication Networks (ECNs) defines the Fourth Market.
The Fourth Market allows institutional participants to trade large blocks of stock quietly and at lower cost by excluding broker-dealer commissions.

Anahtar Kavram

Fourth Market execution structure and institutional ECN trading
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Konular

Types of Markets and Trading Venues

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