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Zorluk: OrtaTypes of Markets and Trading Venues

A broker-dealer receives a market order from a retail customer to purchase shares of an over-the-counter stock. The firm fills the transaction directly using shares held in its own inventory rather than routing the order to another market buyer or seller. In what capacity is the firm acting for this transaction, and how is its compensation structured?

  1. The firm is acting as a principal (dealer) and is compensated through a markup.Cevap
  2. B
    The firm is acting as an agent (broker) and is compensated through a commission.
  3. C
    The firm is acting as a primary market underwriter and is compensated through an underwriting spread.
  4. D
    The firm is acting as a clearing depository and is compensated through custody safekeeping fees.

Cevap

The firm is acting as a principal (dealer) and is compensated through a markup.
When a broker-dealer executes a customer order by buying for or selling from its own inventory, it acts in a principal (dealer) capacity. In principal transactions, the firm is compensated by adjusting the price with a markup when selling securities to a customer or a markdown when purchasing from a customer.

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1
Determine the firm's trading role based on order execution source
The firm executed the transaction out of its own inventory account.
Trading from proprietary inventory defines a dealer acting in a principal capacity taking the opposite side of the customer trade.
2
Identify the standard compensation mechanism for principal transactions
Principal transactions involve adding a markup when selling to a customer (or subtracting a markdown when buying).
Commissions are reserved for agency transactions where the firm acts as a broker matching third parties.

Anahtar Kavram

Broker (Agency) vs. Dealer (Principal) Execution and Compensation
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Konular

Types of Markets and Trading Venues

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