Series 6
Securities Markets - The National Association of Securities Dealers Automated Quotation System (Nasdaq)
The Nasdaq system is by far the most important network that connects buyers and sellers in the OTC market. It is essentially a computer system run by FINRA that provides member firms with quotations for over 5,000 OTC securities. Given the fact that more shares trade daily on it than on any of the exchanges, the Nasdaq represents the largest securities market in the U.S.
Types of Issues
Securities trading on the Nasdaq must meet minimum listing requirements. Two types of issues trade on the system:
Stock Quotation Service Levels
The Nasdaq system provides three levels of stock quotation service - simply called Levels I, II and III - to the securities industry:
Review the important differences between the NYSE and Nasdaq in the following article: The Tale of Two Exchanges.
Types of Issues
Securities trading on the Nasdaq must meet minimum listing requirements. Two types of issues trade on the system:
- Nasdaq National Market securities and
- Nasdaq Small Cap securities
Stock Quotation Service Levels
The Nasdaq system provides three levels of stock quotation service - simply called Levels I, II and III - to the securities industry:
- Level I is available to registered representatives. It displays the inside market only - that is, the best (highest) bids and the best (lowest) asks for securities in the system. Level I prices are not guaranteed, as the market fluctuates too rapidly for a firm quote.
- Level II is available to FINRA approved subscribers only. It provides the current quote and quote size available from each market maker in a security. A market maker must guarantee a firm quote for at least 100 shares in a security in order to list a quote on the system.
- Level III provides subscribers with all of the services of Levels I and II. In addition, Level III allows market makers to update, change or delete their quotes and size of quotes on any security in which they make a market. Level III is the only level that allows quote inputs.
| Exam Tips and Tricks Make sure you know what types of securities trade on each market or exchange! Start with the securities listed on the NYSE. |
Review the important differences between the NYSE and Nasdaq in the following article: The Tale of Two Exchanges.
comments powered by Disqus
Free Annual Reports
