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 designated marker maker for that security. The DMM is an exchange member who is responsible for maintaining a fair and orderly market for the stock in which they they are assigned as the DMM. The 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.

Series 62 Test Prep Guide

Priority Of Exchange Orders

Related Articles
  1. Insights

    What's an Exchange?

    An exchange is an organized marketplace where securities and other financial instruments are traded.
  2. Insights

    Designated Market Maker

    A designated market maker maintains fair and orderly markets for an assigned set of listed firms and improves market liquidity.
  3. Investing

    The Auction Method: How NYSE Stock Prices are Set

    The New York Stock Exchange (NYSE), sometimes referred to as “the big board,” is the oldest and largest stock exchange in the United States. NYSE is the place investors think of when ...
  4. Investing

    What is a Financial Market?

    “Financial market” is a broad term used to describe any forum where buyers and sellers meet to trade assets.
  5. Investing

    Ins And Outs Of Seller-Financed Real Estate Deals

    Seller financing works like this: Instead of a buyer receiving a loan from a bank, the person selling the house lends the buyer the money for the purchase.
  6. Investing

    Who Owns The Stock Exchanges?

    As M&A heats up among the exchanges, here's how the market currently looks.
  7. Insights

    Getting to Know the Stock Exchanges

    Here are the answers to all the questions you have about stock exchanges but are too afraid to ask.
  8. Investing

    What does DDP Mean?

    Delivery duty paid (DDP) is a shipping term specifying that the seller is responsible for all costs associated with delivery of the goods to the buyer. It is usually used when goods are exported ...
  9. Financial Advisor

    Series 24 Exam Prep: Stock Exchanges

    Before you take the series 24, you need to understand exchanges, listing requirements and much more.
Frequently Asked Questions
  1. Do interest rates increase during a recession?

    Learn why interest rates do not rise in a recession; in fact, the opposite happens. Identify the factors that reduce interest ...
  2. What is the difference between deflation and disinflation?

    Learn what deflation and disinflation are, how supply and demand affect price levels, and the difference between deflation ...
  3. What rights do all common shareholders have?

    Learn what rights all common shareholders have, and understand the remedies that can be taken if those rights are violated ...
  4. What does CHIPS UID mean?

    Learn what CHIPS UID stands for and how it facilitates the transfer of funds as the back-end of the ACH network for both ...
Trading Center