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Soru

Zorluk: KolayTypes of Markets and Trading Venues

Which of the following statements correctly describe secondary market trading venues and transaction structures? (Select TWO correct options)

  1. Physical exchange floors and electronic auction markets facilitate secondary market trading of existing securities between investors.Cevap
  2. The Fourth Market consists of direct trading between institutional investors through Electronic Communication Networks (ECNs) without broker-dealer intermediation.Cevap
  3. C
    In primary market transactions, existing shareholders trade shares directly with each other on national securities exchanges.
  4. D
    A broker-dealer executing a customer order in an agency capacity fills the trade directly from its own inventory and charges a mark-up.

Cevap

The statements describing secondary trading venues facilitating investor-to-investor trades and the Fourth Market enabling direct institutional trading via ECNs are correct.
Secondary markets encompass exchange and off-exchange venues where existing securities are bought and sold among public investors. The Fourth Market specifically utilizes Electronic Communication Networks (ECNs) to facilitate direct trading between institutional investors without broker-dealer intermediation.

Adım Adım Çözüm

1
Analyze the definition of secondary market venues
Confirm that physical exchange floors and electronic trading venues handle transactions of already-issued securities between investors.
Secondary market trading provides liquidity without directing proceeds to the original issuing corporation.
2
Identify Fourth Market trading characteristics
Confirm that institutional block trades directly executed through ECNs represent the Fourth Market.
Institutional investors use ECNs to execute transactions directly with other institutions, avoiding broker-dealer fees.
3
Evaluate distractors regarding primary market function and broker-dealer roles
Reject statements that misclassify secondary trading as primary or misidentify broker agency capacity as trading from inventory.
Primary transactions involve new issues from issuers, and broker (agency) execution charges commissions without taking inventory risk.

Anahtar Kavram

Secondary market venues facilitate existing security transfers between investors, while specialized tiers like the Fourth Market utilize ECNs for direct institutional execution.
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Konular

Types of Markets and Trading Venues

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