Series 6

AAA

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:

  • Nasdaq Global Market securities and
  • Nasdaq Capital market securities

Of the two, GMS securities are the more stringently regulated, widely traded and well-known.

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 subscription service is for broker dealers that are order entry firms. Level II allows the broker dealer to see the inside market, as well as the quotes of all market makers and to execute orders over the NASDAQ workstation
  • 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.

Broker-Dealers
comments powered by Disqus
Related Articles
  1. Municipal Bond Tips For The Series 7 ...
    Insurance

    Municipal Bond Tips For The Series 7 ...

  2. 6 Proven Tips For Series 6 Success
    Retirement

    6 Proven Tips For Series 6 Success

  3. Tips For Passing The Series 6 Exam
    Insurance

    Tips For Passing The Series 6 Exam

  4. Banker Or Broker: Which Career Is Right ...
    Professionals

    Banker Or Broker: Which Career Is Right ...

  5. Day Trading: Impoverishing Dilettantes ...
    Investing Basics

    Day Trading: Impoverishing Dilettantes ...

Trading Center