Securities Markets - Introduction

The Series 6 registered representative must be familiar with how the securities markets work. The SEC believes that a representative has the fiduciary duty to obtain the best execution for clients' securities transactions where the representative is in a position to direct customer trades. Since you will be recommending mutual funds to your clients, it is important for you to understand how the securities comprising those funds are traded on the exchanges and over-the-counter markets.

In the United States, security trading occurs on several exchanges, which are membership associations designed to facilitate trading among members, whether for their own accounts or for those of their customers. Competing buyers bid for stocks and bonds offered by competing sellers in the exchange. An exchange is merely an example of an auction market. In addition, certain securities are traded outside of the exchanges, in the over-the-counter market. The most widely recognized system within the over-the-counter market is the Nasdaq.



Exchange Markets


Related Articles
  1. Professionals

    THE EXCHANGES

    The Exchanges The most recognized stock exchange in the world is the New York Stock Exchange or the NYSE. There are, however, many exchanges throughout the United States that all operate in a ...
  2. Investing Basics

    Why You Should Understand The Stock Market

    Even if you don't invest a cent in stocks, you should still understand how the stock market works. Find out why.
  3. Professionals

    Exchange Market Structure

    CFA Level 1 - Exchange Market Structure. Contrasts the call and continuous market structures. Showcases the structural differences between regional, national and OTC markets.
  4. Professionals

    The Exchanges

    The most recognized stock exchange in the world is the New York Stock Exchange or the NYSE. There are however, many exchanges throughout the United States that all operate in a similar manner. ...
  5. Professionals

    The Exchanges

    The most recognized stock exchange in the world is the New York Stock Exchange or the NYSE. There are however, many exchanges throughout the United States that all operate in a similar manner. ...
  6. Investing Basics

    A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks trade.
  7. Investing Basics

    Stocks Basics: How Stocks Trade

    Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price. Some exchanges are physical locations where transactions are carried out on a trading ...
  8. Investing Basics

    What's an Exchange?

    An exchange is an organized marketplace where securities and other financial instruments are traded.
  9. Professionals

    Exchange Markets

    Worldwide, there are over 100 securities exchanges where buyers and sellers meet to exchange goods and services in an organized, orderly fashion. Before we proceed, beginners should refer ...
  10. Professionals

    Securities Exchange Act of 1934

    FINRA Series 6 Exam Study Guide - Securities Exchange Act of 1934. This section provides the definitions under the act of 1934, the creation of SEC, National Securities Exchanges and the fingerprinting ...
RELATED TERMS
  1. Equity Market

    The market in which shares are issued and traded, either through ...
  2. Exchange

    A marketplace in which securities, commodities, derivatives and ...
  3. Securities Exchange Act Of 1934

    The Securities Exchange Act of 1934 was created to provide governance ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context ...
  5. Fourth Market

    The trading of exchange-listed securities between institutions ...
  6. Registered Representative - RR

    A person who works for a brokerage company that is licensed by ...
RELATED FAQS
  1. How does a company move from an OTC market to a major exchange?

    The over-the-counter market is not an actual exchange like the NYSE or Nasdaq. Instead, it is a network of companies that ... Read Answer >>
  2. What does it mean when my broker says that shares are for auction?

    An auction market is one in which stock buyers enter competitive bids and stock sellers enter competitive offers at the same ... Read Answer >>
  3. Why are OTC (over-the-counter) transactions controversial?

    Learn more about over-the-counter transactions, and why OTC traders are considered riskier than traders working with larger ... Read Answer >>
  4. What are the steps to get a company listed on the OTCBB?

    The over-the-counter bulletin board (OTCBB) is a regulated quotation service for over-the-counter (OTC) securities. The securities ... Read Answer >>
  5. What is the difference between the bond market and the stock market?

    The bond market is where investors go to trade (buy and sell) debt securities, prominently bonds. The stock market is a place ... Read Answer >>
  6. What is an over-the-counter derivative?

    Learn more about over-the-counter derivatives and how they work with an example of a derivative trade-off exchange. Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center