NASDAQ Market / OTC Market

A market maker enters a quote of $10.50 Bid; $10.75 Ask; with a size of "1 x 1" into the NASDAQ System. If a market order to sell is entered into the system for 500 shares, and this dealer's quote is matched, the market maker will be obligated to buy:

A 100 shares at $10.50 A market order to sell will be matched, in sequence, against the "Bid" quotes in the system, from highest to lowest. Such a market order "sweeps" the book from high to low price, until it is filled. Because this dealer's Bid of $10.50 is only for 100 shares, this is the amount that the system will match. It will then move to the next Bid quotes from other dealers, in sequence, until the order is filled for 500 shares

Which of the following will result in a "locked-in" trade?

A A market order placed for a NASDAQ issue quoted in the NASDAQ System (Single Book) A "locked-in" trade is one in which all of the terms and conditions of the trade are accepted by buyer and seller. Once the trade is executed, last-sale reporting to NASDAQ and reporting to the clearance corporation (NSCC) are done electronically. System trades of NASDAQ stocks are "locked-in" - the NASDAQ System is both an automated quotation and execution system. Anyone who enters a quote or order into the System agrees to accept automated executions. Note that the previous name for the System was Single Book, and this may still show on the exam.

A customer has previously entered an order to sell 100 shares of ABCD at $9.50. The quotations terminal shows the last trade of ABCD taking place at $9.50 yet the customer's order has not been executed. Which are valid reasons for this? I The trade at $9.50 was performed by another market maker II There were other limit orders at the same price ahead of the customer's order III The trading department has closed for lunch IV The firm sold the stock for its own account at $9.50 ahead of the customer's order

A I and II The customer's limit order to sell at $9.50 might not be executed even though the last trade occurred at $9.50 because there were other limit orders ahead of his order or another market maker performed a trade at that price. Trading departments must stay open at all times during the hours that the market is open. Firms are prohibited from executing orders for their own account if they compete with an existing customer order. Before the firm can sell for itself at $9.50, it must first sell for the customer at $9.50. Once the customer orders are cleared, the firm can trade at that price.

Dark Pools are: I regulated as broker-dealers II regulated as exchanges III subject to Regulation ATS IV not subject to Regulation ATS

A I and III An evolution of the ECN is the "dark pool." Dark pools are operated by the larger broker-dealers (e.g., Goldman Sachs) and there are some that are independent companies (e.g., Liquidnet). They allow institutions to buy or sell very large blocks without displaying their orders in the ADF or in a display system such as the NASDAQ System. They are called dark pools because the size of the trade and the identity of the institution are not displayed. This avoids the problem that could occur where the display of a very large order in such a system, by itself, could move the market. If there is a match in a dark pool and a trade results, it still must be reported to the appropriate tape.

Which of the following statements are TRUE regarding NASDAQ Level II? I Each market maker posting a quote must be willing to trade at least 1 round lot of 100 shares II Each market maker posting a quote must be willing to trade at least 10 round lots of 100 shares III If a market maker refuses to honor a quote, this is called "backing away" IV If a market maker refuses to honor a quote, this is called "selling away"

A I and III NASDAQ Level II shows all bid and ask quotes for NASDAQ stocks with the size of the quote. The minimum quote size in the System is 1 round lot of 100 shares. If a market maker shows a larger size, it must be willing to trade up to this amount at the quote. If a market maker refuses to honor a quote, this is called "backing away;" and is a prohibited practice. "Selling away" is another prohibited practice where a registered representative "sells away" from his firm - that is, sells a customer a security that is not offered through that firm.

Position trading by "over-the-counter" firms is: I buying securities into, or selling securities from, the firm's inventory account II buying customer positions from, or selling customer positions to, other market markers III permitted under FINRA rules IV a prohibited practice under FINRA rules

A I and III Position trading is the buying of securities into a dealer's inventory account; and the selling of securities out of the dealer's inventory account. The profit to the dealer is the spread between the bid and ask quote. This is the basic function of an over-the-counter market maker; and is, of course, permitted under FINRA rules.

Which of the following orders can be placed in the NASDAQ System (Single Book)? I Market order II Stop order III Limit order IV Not Held order

A I and III Single Book is the quotation and trading system for all NASDAQ issues - both Global Market and Capital Market. The system accepts market orders, marketable limit orders (a limit order at the current inside price) and limit orders that are away from the market. The system cannot accept orders that require human judgment for execution such as a market-not held order (where a trader uses his or her best judgment decide when to execute to get the best price). Finally, the system does not accept stop orders - the same is true for the NYSE Super Display Book system. Member firms take stop orders into their internal systems and feed them to the appropriate exchange if they are triggered.

Which of the following trades are reported through ACT's Trade Reporting Facilities (TRFs)? I NASDAQ Market Center trade of a NASDAQ listed stock II Super Display Book trade of an NYSE listed issue III Trade of an NYSE listed issue in the Third Market IV Trade of a listed option contract on the CBOE

A I and III The "TRF" is the Trade Reporting Facility that is operated by the ACT system. Initially, the system was used for NASDAQ only. When NASDAQ became a registered stock exchange in late 2006, separate "TRFs" were created using ACT, which allowed NASDAQ to sell its Network C Tape (each exchange sells its tape, it is a big source of revenue for the exchange). The TRFs run by ACT include: NASDAQ TRF (reporting trades of NASDAQ stocks to the Network C Tape); NYSE TRF (reporting Third Market trades of NYSE listed issues to the NYSE Network A Tape. The NYSE feeds the trades that take place on its trading floor to this tape on its own); ORF (the Over-The-Counter Reporting Facility) which reports trades OTCBB and Pink Sheet issues; TRACS (Trade Reporting and Compliance Service) which reports trades of NYSE, NYSE American (AMEX) and NASDAQ stocks that take place on ECNs that are not linked into an exchange. TRACS feeds the trade into the appropriate Network A, B or C Tape. Any trade that takes place on the NYSE (which owns and runs Super Display Book) is reported to the Network A Tape by the NYSE. Options trades occurring on exchanges such as the CBOE are reported through "OPRA" - the Options Price Reporting Authority - which is not covered on Series 7.

Which statements are TRUE regarding the NASDAQ System (Single Book)? I The System handles trades up to a maximum size of 999,999 shares II The System handles trades of any size III The System handles both agency and proprietary orders IV The System handles customer agency orders only

A I and III The automated system for trades of NASDAQ issues is the NASDAQ System (previously called Single Book). It accepts orders up to 999,999 shares. Orders can be split for entry into the system; and can be aggregated and executed as a single order (cheaper than multiple orders) within the system size limit. Both agency and principal transactions can be effected through the System.

An over-the-counter brokerage firm receives a customer order to buy 100 shares of ABCD stock and another customer order to sell 100 shares of ABCD stock at the same time. If the firm "crosses" the orders, it: I acts as an agent in the transactions II acts as a principal in the transactions III charges a commission on each transaction IV earns a mark-up on each transaction

A I and III This is an "agency" cross. The broker-dealer acts as agent, earning a commission from both the buyer and seller. There is no need to go to a market maker in this transaction, but the trade must be effected at a price that is reasonably related to the current market.

The Pink Sheets contain quotes for:

A OTC issues The "Pink Sheets" give over-the-counter stock quotes for issues not included on an exchange such as the NYSE or NASDAQ. It only shows OTC stock quotes. It does not include corporate or municipal bond quotes.

All of the following securities are generally traded "over-the-counter" EXCEPT:

A Options The vast majority of corporate debt trades "OTC," with the exception of a small amount of bond trading performed on the NYSE. All trades in Treasury issues and municipal bonds are effected "over-the-counter." However, all options trades are effected on exchanges, the CBOE being the largest options exchange. The other exchanges that trade options are the AMEX (American Stock Exchange), PHLX (Philadelphia Stock Exchange), and PSE (Pacific Stock Exchange - now renamed the ARCA exchange).

An OTC equity trader has received a large influx of buy orders for ABC stock and, to fill them, has taken a short position in the firm's inventory account. The dealer would most likely:

A increase the ask price in the OTCBB The dealer's Ask price is too low - that is why the buyers are pouring in! The dealer will raise the Ask price - this will discourage buyers. If the dealer were to decrease the Bid price, this would discourage sellers to the dealer - and this dealer needs to buy to cover the current short inventory position. Therefore, the dealer is likely to increase the bid price as well. Decreasing the mark-up charged to customers would encourage more buyers at the Ask, which the dealer does not want. Placing a "BW" in the OTCBB is a "Bids Wanted." This indicates that the dealer wants to sell more of the stock to any willing buyers, which is not the case - the dealer wants to buy the stock, not sell it! Rather, he or she would want to place an "OW" - Offers Wanted - in the OTCBB, telling potential sellers that the dealer is interested in buying.

An approximate market value with no bid or offer would define what kind of quote?

A nominal A nominal quote is really no quote - it is simply an approximate price. The dealer is not obligated to trade at this quote and must identify it as a nominal quote. A subject quote is essentially the same thing as a nominal quote. A firm quote means that the dealer is willing to trade the amount stated at the price given. A "work-out" quote is sometimes given for very thinly traded issues, where there is no current trading in the issue, but the trader believes that the trade can be executed in a given price range. After giving the "work out" quote, the trader will search the market to "work out" the trade within the stated price range.

A member firm enters a "bogus" quote that improves the National Best Bid or Offer in order to attract other market participants to enter quotes at the improved (higher bid or lower ask) price. The original firm immediately cancels its "bogus" quote and enters orders to execute against the "improved" prices placed by others. This is a fraudulent trading practice known as:

A spoofing

NASDAQ market makers that receive trades for execution are required to report:

A trades within 10 seconds of execution

A market maker enters a quote of $20.50 Bid; $21.00 Ask; with a size of "5 x 5" into the NASDAQ System. If a market order to buy is entered into the system for 1,500 shares, and this dealer's quote is matched, the market maker will be obligated to sell:

B 500 shares at $21.00 A market order to buy will be matched, in sequence, against the "Ask" quotes in the system, from lowest to highest. Such a market order "sweeps" the book from low to high price, until it is filled. Because this dealer's Ask of $21.00 is only for 500 shares, this is the amount that the system will match. It will then move to the next Ask quotes from other dealers, in sequence, until the order is filled for 1,500 shares

Quotes placed by market participants in unlinked ECNs can be accessed through:

B ADF An unlinked ECN is one that is not placing its quotes into Single Book. The SEC mandated that the FINRA provide an Alternate Display Facility ("ADF") to publicly display these quotes. Thus, to find the best market for a NASDAQ stock, both NASDAQ and the ADF must be checked.

Which statements are TRUE when comparing the NYSE and NASDAQ markets? I The Specialist (DMM) trades on the NYSE II The Specialist (DMM) trades on NASDAQ III The Market Maker trades on the NYSE IV The Market Maker trades on NASDAQ

B I and IV Specialists (now called Designated Market Makers) are the assigned market makers that trade a given stock on the NYSE floor. There is only 1 DMM assigned to each stock traded, and the Specialist/DMM must make a fair and orderly market in that stock and must stand ready to trade at all times that the market is open. Market Makers trade NASDAQ stocks through the NASDAQ System. NASDAQ has multiple competing market makers - it is competition that creates the "best" market. Market makers are not obligated to make a continuous competitive market in a stock (like NYSE Specialists/DMMs), but it is in their best interests to do so.

Which of the following persons trades securities over-the-counter?

B Market maker Over-the-counter dealers are called market makers. Two dollar brokers and Specialists (now renamed DMMs - Designated Market Makers) trade on stock exchanges. Registered representatives cannot trade securities - they can enter orders on behalf of customers to be executed by traders in the market.

The OTCBB includes quotes for:

B Non-NASDAQ Stocks Over-the-counter stocks that are too small for NASDAQ are found on the OTCBB - the "Over-The-Counter Bulletin Board" (run by FINRA) or can be found in the privately run "Pink Sheets" - now renamed the Pink OTC Markets.

A member firm receives a large block order to buy 100,000 shares of XYZ stock, which is not actively traded. Which customer(s) of the firm can buy XYZ stock prior to the filling of the block trade?

B Other customers of the firm who place buy orders, if the firm has information barriers in place In its "front running" rule, FINRA gives an exception to the prohibition on a member firm placing orders to trade a stock prior to the filling of a large block order if the firm has information barriers in place. If this is the case, the front running prohibition only falls on the people at the firm who know about the existence of the large block order. Persons placing orders to buy XYZ stock at the firm who have no knowledge of the impending block purchase are exempted from the "front running" rule because, with effective information barriers in place, they could not have known about the large trade that is about to be placed.

A member firm receives a large block order to buy 100,000 shares of XYZ stock, which is not actively traded. Which customer(s) of the firm can buy XYZ stock prior to the filling of the block trade?

B Other customers of the firm who place buy orders, if the firm has information barriers in place In its "front running" rule, FINRA gives an exception to the prohibition on a member firm placing orders to trade a stock prior to the filling of a large block order if the firm has information barriers in place. If this is the case, the front running prohibition only falls on the people at the firm who know about the existence of the large block order. Persons placing orders to buy XYZ stock at the firm who have no knowledge of the impending block purchase are exempted from the "front running" rule because, with effective information barriers in place, they could not have known about the large trade that is about to be placed.

An OTC equity trader has received a large influx of sell orders for ABC stock and, to fill them, has taken an extremely large long position in the firm's inventory account. The dealer would most likely:

B decrease the bid price in the OTCBB The dealer's Bid price is too high - that is why the sellers are pouring in! The dealer will lower the Bid price - this will discourage sellers. If the dealer were to decrease the Ask price, this would encourage sellers to the dealer - and this dealer does not need to buy any more of the stock, he already has an overly large long position. Decreasing the mark-down charged to customers would encourage more sellers at the Bid, which the dealer does not want, because the dealer does not want to buy any more stock. Placing an "OW" in the OTCBB is an "Offers Wanted." This indicates that the dealer wants to buy more of the stock from any willing sellers, which is not the case - the dealer wants to sell the stock, not buy it! Rather, the dealer would want to place a "BW" - Bids Wanted - in the OTCBB, telling potential buyers that he or she is interested in selling.

The "spread" on a NASDAQ stock is the difference between the prices of the:

B highest bid and lowest ask When referring to the market for a stock, the "spread" is the difference between the prices of the best bid and best offer. The best bid price (price at which a dealer is willing to buy from a customer) is the highest bid. The best ask price (price at which a dealer is willing to sell to a customer) is the lowest ask price. A narrow bid-ask spread indicates a competitive market.

If a member firm routes a customer market order for a Global Market listed issue to NASDAQ's automated trading system, the order will be sent to:

B the NASDAQ Market Center Execution System (Single Book) The automated order execution system for NASDAQ issues is now called the NASDAQ Market Center Execution System, or simply, the "System." The previous name, now obsolete, was Single Book. Super Display Book is the NYSE's automated trading system. The Order Support System (OSS) is the CBOE's automated trading system. The OTCBB (Over-The-Counter Bulletin Board) gives dealer offerings of stocks that are not listed on an exchange.

A NASDAQ security is bid at $35 and offered at $35.50. An over-the-counter trader effects a trade at $35.25 and charges a commission of $.25 to the customer. The price that will show on the tape is:

C $35.25 Trade prices that are shown on the tape do not include commissions to customers. This trade was effected at $35.25, and this is the price that will show on the tape.

Which of the following describes an arbitrage transaction?

C Buying and selling short the same security in different markets to lock in a price differential If a security is bought on one market; and simultaneously sold on another market; this is known as an arbitrage transaction and is used to exploit price differences for the same security that may exist in those markets. Choice A describes a "proceeds transaction;" Choice B describes a "principal" transaction, or "position" trade; while Choice D describes a riskless principal transaction.

Which of the following securities are ACTIVELY traded in the Over-The-Counter Market? I Common stocks II U.S. Government bonds III Real Estate Investment Trusts IV Limited Partnership (Direct Participation Programs)

C I, II, III Direct Participation programs do not trade (with the exception of MLPs - Master Limited Partnerships) - these are illiquid investments. Listed common stocks, by definition, trade on a stock exchange floor - "listed" means listed on an exchange. U.S. Government - bonds are only traded OTC. Some REITs are listed on exchanges, and others trade over-the-counter.

Over-the-counter traders perform which of the following functions? I Giving quotes to customers II Taking positions in securities III Performing clerical duties IV Establishing spreads

C I, II, IV OTC traders position trade (that is, trade for the firm's inventory account), establish spreads (the difference between the bid and ask quote that is the profit for the dealer), and give quotes to customers. Clerical duties are handled by clerks.

In riskless principal transaction, the dealer: I buys a security into inventory in advance of filling a customer order to buy that security II buys a security into inventory after receiving a customer order to buy that security III charges a mark-up to the customer IV does not charge a mark-up to the customer

C II and III A riskless principal or simultaneous transaction occurs when a dealer receives a buy order from a customer and then purchases the stock into inventory and resells it to the customer. The dealer wasn't holding the security when the order was received, so there is no "risk" to the dealer of falling prices giving the dealer an inventory loss. The dealer has no risk in the transaction and the mark-up charged must be disclosed to each customer.

An equity trader has received a large order to buy XXX stock from an institutional client that is to be filled at the closing price that day. The firm's proprietary trading desk has been accumulating that stock during the day, which it will sell to the customer at the closing price. Just prior to the market close, the trader places a sequence of small market orders to drive the closing price up, so the firm can have a larger profit filling the institutional client's order. This is an example of:

C Marking the close

Over-the-counter stock price quotes can be found in which of the following?

C Pink Sheets Over-the-counter "penny" stock price quotes can be found in the Pink Sheets which are now only on the internet. The Yellow Sheets, now out of business, used to contain corporate bond quotes. A "red herring" is a preliminary prospectus that is used to collect indications of interest for a new securities issue that is in registration. The "Black List" is a generic term for a listing of undesirables.

Which statement is TRUE about the NASDAQ Regular Market trading session?

C The session coincides with NYSE trading hours NASDAQ's Regular Hours session is from 9:30 AM to 4:00 PM Eastern Time - the same as NYSE hours.

All of the following terms are synonymous EXCEPT:

C dealer An agent is a broker who is middleman in a transaction, earning a commission. A dealer is a market maker, who is a principal in a transaction, earning a mark-up or mark-down.

When a dealer says "The price is 42.25," the quote is considered a:

C firm quote When a dealer says "the price is," the quote is firm for a normal trading unit at the stated price. A nominal quote is a dealer's guess at the current price - he or she is not committed to trading at that quote. A "work-out" quote is sometimes given for very thinly traded issues, where there is no current trading in the issue, but the trader believes that the trade can be executed in a given price range. After giving the "work out" quote, the trader will search the market to "work out" the trade within the stated price range. A subject quote is subject to confirmation and can change - it is very close to a nominal quote.

All of the following statements are true regarding quotes provided on NASDAQ Level IIEXCEPT:

C quotes are shown for NYSE listed issues NASDAQ Level II shows all bid and ask quotes for NASDAQ stocks with the size of the quote. The minimum quote size is 100 shares (1 round lot). Quotes for odd lots (less than 100 shares) can be entered into the system, but are not displayed until there are other odd lot orders at the same price that aggregate to 100 shares or over. A mixed lot is an order that has both a round lot and an odd lot component (such as an order for 143 shares - which is composed of a 100 share round lot and a 43 share odd lot). Just like odd lots, any portion of the order that is less than 100 shares is not displayed until there are other odd lot orders at the same price that aggregate to 100 shares or more.Quotes for NYSE listed issues are not found on NASDAQ - rather they are found on CQS - the Consolidated Quotations Service.

The "Gray Market" is:

C unlisted securities that are not quoted in the OTCBB or Pink OTC Markets that are traded OTC The "Gray Market" is the quoting and trading of securities OTC that are not eligible for inclusion in the OTCBB or Pink OTC Markets, usually because the company is too small, bankrupt, or is not currently reporting to the SEC. This market is quite illiquid, but if a trade occurs, it must still be reported - so these companies have trading symbols assigned to them.

A client believes that XYZZ stock has bottomed in price and is ready for a steep rebound. Which recommendation has the lowest profit potential?

D Buy XYZZ stock and sell an XYZZ call The purchase of a call gives unlimited potential gain in a rising market. Rights allow the owner to buy the stock at a fixed price, typically good for 30-60 days from issuance. These also have unlimited upside potential. Warrants allow the owner to buy the common stock at a fixed price, typically good for up to 5 years from issuance. They are attached to the sale of new bond and preferred stock offerings, to help make them more marketable. This would also give unlimited profit in a rising market. Of course, the purchase of XYZZ stock would give the customer a gain in a rising market, but if the customer also sold an XYZZ call, the stock would be called away in a rising market at the strike price, and the customer would not enjoy the upside gain. The customer's gain would be limited to the premium collected, net of any difference between the stock cost and the strike price of the call.

Which of the following can result in the establishment of a short position? I Arbitrage transaction II Sale of a security "against the box" III Position trades of borrowed shares

D I, II, III

Last sale information is available for which of the following? I NYSE listed issues II NASDAQ listed issues III Pink Sheet issues IV CBOE listed issues

D I, II, III, IV

Which statements are TRUE about over-the-counter transactions? I In a principal transaction, the customer is charged a mark-up or mark-down II In an agency transaction, the customer is charged a commission III In a principal transaction, the firm trades from its inventory account IV In an agency transaction, the firm trades with other market makers

D I, II, III, IV

Which of the following securities do NOT trade on NASDAQ? I Global Market stocks II Options on Global Market stocks III Capital Market stocks IV Options on Capital Market stocks

D II and IV NASDAQ is divided into 2 tiers of stock listings. The larger NASDAQ listings such as Microsoft or Intel are included in the "Global Market." The lower tier of smaller stocks is called the NASDAQ Capital Market. NASDAQ does not trade any options.

Which statement is FALSE about OATS?

D Orders for CBOE-listed options are entered into OATS OATS stands for "Order Audit Trail System." It electronically captures order information for U.S equities securities (no more paper order tickets). OATS records of orders are now required for all U.S. equities markets - NYSE, NYSE American (AMEX), NASDAQ and also for OTCBB and Pink OTC Markets issues. The "idea" is to give FINRA an electronic order trail of each order from entry to execution to trade reporting and comparison. Since each order is entered independently, both buy and sell orders are entered. It does not apply to options orders because there is unique information on each options order (basically whether the transaction is an opening or closing transaction) that OATS does not capture.

All of the following can result in the establishment of a short position EXCEPT:

D Selling a long position Short positions are established in arbitrage transactions (the simultaneous purchase and short sale of a security in two different markets to lock in a temporary price difference). A short position is taken when a security is sold "against the box" - meaning that the long position is being held and an equivalent number of shares are being borrowed and sold to lock in a profit. Finally, position trades of borrowed shares are short sales. Selling a long position is just selling a position that was originally purchased. The purchased shares are delivered to satisfy the sale - there is no borrowing of shares.

Comparing the first and second markets, which statement is FALSE?

D The Second Market has listing standards Each exchange with a trading floor is an auction market (First Market). The over-the-counter market (Second Market) is a negotiated market. OTC equities are quoted in either the OTCBB or the Pink OTC Market. These "quotations vendors" have no listing standards. In contrast, each exchange has its own listing standards.

A member that has knowledge of a client order that has not been entered on a marketplace that could reasonably be expected to affect the market price of the security is prohibited from all of the following EXCEPT:

D accepting an unsolicited order to buy from a client Consider this question to be a learning lesson in everything that is prohibited about "front running." Prior to entering a customer order that is likely to have market impact (meaning a big institutional order), a member firm cannot place an order in that security for the firm's account; cannot solicit others to place orders; and cannot inform others about the existence of the market-impact order so that they can "front run" it. However, a member firm can accept and fill an unsolicited order to buy that security from a client for that security - the client would have no way to know that another client was entering a larger order that could affect the security's price.

All of the following terms are synonymous EXCEPT:

D agent A dealer is a market maker, who is a principal in a transaction, earning a mark-up or mark-down. An agent is a broker who is middleman in a transaction, earning a commission.

Registered representatives: I can trade securities on stock exchange floors II cannot trade securities on stock exchange floors III can trade securities over-the-counter IV cannot trade securities over-the-counter

II and IV Registered representatives cannot trade securities - they can enter orders on behalf of customers to be executed by traders in the market.

Which of the following describes a proceeds transaction?

Selling stock at the direction of a customer and using the proceeds to buy another stock for that customer In a proceeds transaction, a customer directs that the firm sell a position owned by the customer, and use the "proceeds" to buy another position. In effect, the firm is performing 2 trades for the customer. Choice A describes position trading; Choice B describes a riskless principal transaction; and Choice C describes an arbitrage transaction.

The ACT system:

intakes entries of completed trades for reporting, matching and clearance The ACT system is where the details of completed trades are entered by market participants (The NASDAQ System does ACT reporting automatically; the information must be entered manually for OTCBB and Pink Sheet trades). The ACT system then reports the trade to the tape; to the contra-party to the trade for matching; and to the clearing corporation. FQCS - the Firm Quote Compliance System - is used to file reports of backing away violations (this is not tested on Series 7). ACES is the system that allows NASDAQ Order Entry firms to "pass through" their limit orders to NASDAQ Market Makers for order entry and maintenance. The NASDAQ Market Center Execution System is the automated quotations and execution system for trades of NASDAQ issues.

A dealer offering an OTC stock in the Pink Sheets publishes a quote for 1,000 shares "AON" This means that the dealer:

will only sell all of the shares at the stated price A quote that is published as "AON" means All or None. The dealer will sell all of the securities at that price, but will not accept a partial order at that price.