Types of exchange membership

there are 4, list em!

dealer and specialist, floor broker, and commision broker.

nice work pepp

describe what they do :P.

easy, dealer is a dealer, floor broker assists commistion broker, commission broker works for your brokerage house. specialist keeps track of limit orders and provides liquidity.

dealer buys and sells from their own inventory :slight_smile:

Market structure characteristics: A pure auction market is an exchange system where buyers and sellers submit their bid and ask prices to a central location and transactions are matched by brokers who do not have a position in the stock. An auction market is a price-driven market. An order driven system is one in which buyers and sellers submit their orders to dealers, who either buy the stock for their own inventory or sell the stock from their own inventory. An order-driven system is called a dealer market. Membership categories at U.S. exchanges: The specialist controls the limit order books. The commission broker trades for a brokerage firm. Floor brokers act as freelance brokers for other commission brokers. Registered traders trade for their own accounts. Types of orders: Market orders are orders to buy or sell at the best price available. Limit orders are orders to buy or sell away from the current market price. A limit buy is placed below the current price and a limit sell is placed above the current price. Limit orders must be timed: instantaneous, 1 day, 1 week, 1 month or good till canceled. Limit orders are turned over to the specialist by the commission broker. Short sale orders are orders where a trader borrows stock, sells it, and then purchases the stock later to return the stock back to the original owner. Short sales are discussed in greater detail later in this review. Stop loss orders are used to prevent losses or to protect profits. Suppose you own a stock currently selling for $40. You are afraid that it may drop in price, and if it does, you want your broker to sell it, thereby limiting your losses. You would place a stop loss sell order at a specific price (e.g., $35); if the stock price drops to this level, your broker will place a sell market order. A stop loss buy order is usually combined with a short sale to limit losses. If the stock price rises to the “stop” price, the broker enters a market order to buy the stock. Market makers on the U.S. exchanges are called specialists. Specialists provide two basic functions to the exchange: They act as brokers handling the limit order book, where limit and stop orders are maintained. They act as dealers by buying and selling stocks for their own accounts to maintain an orderly market and provide liquidity to the market if there is an inadequate order flow.