Lecture19

Lecture19 - Lecture 19: Brokers, Dealers, Exchanges &...

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Lecture 1 9 : Brokers, Dealers, Exchanges & ECNs Economics 252, Spring 2008 Prof. Robert Shiller, Yale University
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Brokers, Dealers Exchanges & ECNs • Broker-Dealer (BD) is an organization as defined by SEC, hires natural persons as brokers and dealers, its registered representatives • An exchange is a private association of brokers regulated (in the U.S.) by the SEC • Electronic Communications Networks (ECNs) allow investors to communicate with each other, and to exchange: Archipelago (now part of NYSE), BATS, Direct Edge.
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Brokers B rokers act on behalf of O thers as their A gent for which they earn a C ommission
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Dealers A D ealer always acts for H erself, in other words as a P rincipal in the transaction for which she makes a M arkup
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• First Market: NYSE • Second market: NASDAQ National Market (replaced the “pink sheets” in 1971) • Third market: Nasdaq small cap • Fourth market: large institutions trade amongst themselves without the use of a securities firm
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Lecture19 - Lecture 19: Brokers, Dealers, Exchanges &...

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