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


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