The Securities Marketplace - 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. Exchanges are dual auction markets. They provide a central market place where buyers and sellers come together in one centralized location to compete with one another. Buyers compete with other buyers to be the highest price anyone is willing to pay for the security and sellers compete with other sellers to be the lowest price at which anyone is willing to sell a security. All transactions in an exchange-listed security that are executed on the exchange have to take place in front of the “specialist” or designated marker maker for that security. The specialist / DMM is an exchange member who is responsible for maintaining a fair and orderly market for the stock in which they specialize. The specialist / DMM stands at the trading “post” where all the buyers and sellers must go to conduct business in the security. This is responsible for the “crowd” that you see on the news and financial reports when they show the floor of the exchange. All securities that trade on an exchange are known as listed securities.

The Role Of The Specialist / Designated Market Maker (DMM)


Related Articles
  1. Professionals

    Breaking Down Financial Securities Licenses

    Find out which exam you need to begin your career as an investment professional.
  2. Professionals

    Series 99

    FINRA/NASAA Series 99 Exam Guide
  3. Professionals

    Series 24

    FINRA/NASAA Series 24 Exam Guide
  4. Professionals

    Sell-Side Analysts Need Series 86/87 Exams

    Though these tests are not particularly difficult or comprehensive, passing them is mandatory to work as a sell-side analyst.
  5. Professionals

    Succeeding At The Series 63 Exam

    Your career as a securities agent begins with this test. We'll show you how to score high.
  6. Professionals

    Becoming A Registered Investment Advisor

    To become a registered investment advisor requires specific licensing, qualifications and regulations, but the greater freedom may be worth it.
  7. Your Practice

    More Reasons for Advisors to Be Wary of the SEC

    It looks like the SEC is expanding its oversight regarding RIA compliance in the coming months. Here's why RIAs should expect more federal check-ins.
  8. Your Practice

    Is Greater Oversight of RIAs Coming?

    RIAs may be entering an era of greater oversight by the Securities and Exchange Commission. Here's why.
  9. Your Practice

    How to Avoid Advisors Who've Been Disciplined

    It's not hard to find out if a potential financial planner has a shady past. Here's why it's so important to check an advisor's credentials and history.
  10. Products and Investments

    Here's How to Duck a FINRA Slap on L Shares

    Regular and L-share annuity contracts come with back-end surrender charges that clients should know. Here's how to steer clear of any compliance trouble.
RELATED TERMS
  1. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin ...
  2. Series 6

    A securities license entitling the holder to register as a limited ...
  3. Comprehensive Automated Risk Data ...

    The Comprehensive Automated Risk Data System (CARDS) is an initiative ...
  4. Corporate Financing Committee

    A regulatory group that reviews documentation that is submitted ...
  5. Series 79

    A examination to ensure a candidate is qualified to become a ...
  6. Research Analyst

    A person who prepares investigative reports on equity securities. ...
RELATED FAQS
  1. Are hedge funds regulated by FINRA?

    Discover how FINRA's authority extends to hedge funds, an alternative investment vehicle, and learn what rules these funds ... Read Answer >>
  2. How are variable annuities regulated?

    Discover the various rules that the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority ... Read Answer >>
  3. Do financial advisors need to pass the Series 7 exam?

    Learn about the various securities licensing exams, such as the Series 7 exam, and which licenses are required for financial ... Read Answer >>
  4. Is a financial advisor required to have a degree?

    Discover the minimum educational requirements and financial licenses needed to become a financial advisor in the modern corporate ... Read Answer >>
  5. Do financial advisors need to be approved by FINRA?

    Learn about whether a financial advisor may be required to be approved by FINRA, and what exams a financial advisor needs ... Read Answer >>
  6. How does a broker decide which customers are eligible to open a margin account?

    Learn how brokers have the sole discretion to determine which customers can open margin accounts, and understand the rules ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

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

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

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

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

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  6. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because ...
Trading Center