Upstairs Market

DEFINITION of 'Upstairs Market'

The trading of securities, such as stocks, that occurs within a broker-dealer firm instead of at an exchange, such as a stock exchange, or between two broker-dealers in the over-the-counter (OTC) market. In an upstairs market transaction, the broker-dealer typically represents both parties (buyer and seller).

BREAKING DOWN 'Upstairs Market'

An upstairs market exists when trading occurs within a broker-dealer firm and not through a regular exchange such as a stock exchange. The Securities and Exchange Commission (SEC) prohibits this type of trading activity if the prices given to customers are less favorable than the prices available to customers in the general market.

RELATED TERMS
  1. Upstairs Trade

    A buy or sell transaction for an exchange-listed stock that is ...
  2. Principal Orders

    A type of order carried out by a broker-dealer which involves ...
  3. Broker-Dealer

    A person or firm in the business of buying and selling securities, ...
  4. Upstairs Deal

    A business agreement that is made by upper management, and is ...
  5. Stuffing

    The act of selling undesirable securities from the broker-dealer's ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context ...
Related Articles
  1. Professionals

    Series 63 Exam Prep: The Broker-Dealer

    Before you take the series 63, you need to understand jurisdiction and how it affects broker-dealers.
  2. Financial Advisor

    What are the Different Types of Financial Advisors?

    There are two primary types of financial advisors: investment advisors and investment brokers, who work for broker-dealers.
  3. Financial Advisor

    Broker-Dealer Industry 101: The Landscape

    Independent broker-dealers are a great choice for experienced, self-starter planners who have established practices.
  4. Financial Advisor

    How Brokers Are Compensated for Selling Bonds

    Find out how brokers are paid for selling bonds and how the transaction costs are passed on to the investor through a markup or commission.
  5. Markets

    Steps to Starting Up an Independent Broker Dealer

    Launching your own broker-dealer is a lot of work, but the potential payoff is great, both personally and financially.
  6. Markets

    Trading Over the Counter

    OTC trades tend to be for smaller company stocks and debt securities. Debt securities such as bonds are generally traded by investment banks making markets for specific issues.
  7. Financial Advisor

    BD Loans Raise Fines, Conflict of Interest Worries

    This week, the SEC levied fines against two RIAs for failing to disclose to clients that they had received forgivable loans from their broker-dealers.
  8. Financial Advisor

    The Top 25 Broker-Dealer Firms in 2015

    The country's largest broker-dealer firms by annual revenue are clearly doing lots of things right, but they're also facing a massively shifting market.
  9. Financial Advisor

    How the New Fiduciary Rule Will Hit Broker-Dealers

    While the new rules are likely to impact all financial advisors, it is expected that those in the brokerage world will be hit the hardest. Here's why.
  10. Investing

    A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks trade.
RELATED FAQS
  1. When an agent of a broker-dealer begins employment with another broker-dealer ... ...

    The correct answer is D). When an agent moves from one broker-dealer's employ to another, all parties are responsible for ... Read Answer >>
  2. ABC Broker-dealer has no office in state and transacts fewer than five trades during ...

    The correct answer is b. Under these circumstances, the broker-dealer is not required to register with the state and the ... Read Answer >>
  3. What are the SEC (Securities And Exchange Commission) rules about OTC (over-the-counter) ...

    Find out how the Securities and Exchange Commission and the Financial Industry Regulatory Authority regulate trades on the ... Read Answer >>
  4. A sales representative or broker-dealer that violates the Uniform Securities Act ...

    The correct answer is a. The sales representative or broker-dealer is required to pay interest, court and attorney’s fees ... Read Answer >>
  5. A sales representative solicits and executes a mutual fund trade ...

    The correct answer is c). This would be considered a private securities transaction, which is not permitted. All securities ... Read Answer >>
  6. 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 >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center