5 Questions
- Which of the following statements regarding the third market is true?
It is composed of listed securities traded OTC.
2 A large-volume transaction for an institutional investor has occurred on an alternative trading system or network. Entered anonymously, the general public will see no information regarding the volume, price, or who the institutional investor was. This transaction scenario is generally referred to as having occurred
in a dark pool
- The SEC regulates the trading of all of the following except
the London Stock Exchange
- When a broker-dealer maintains an inventory in a particular stock and trades that stock in the OTC market, it is acting as
a market maker
- All of the following are true for designated market makers except
they guarantee the customer will get a profitable trade
Study Notes
Third Market
- A large-volume transaction for an institutional investor on an alternative trading system or network is referred to as the third market.
- In the third market, transactions are entered anonymously, and the general public has no access to information regarding the volume, price, or the institutional investor's identity.
Securities and Exchange Commission (SEC) Regulation
- The SEC regulates the trading of all securities except for one type.
- The type of security not regulated by the SEC is not specified.
Broker-Dealers and OTC Market
- When a broker-dealer maintains an inventory in a particular stock, it is acting as a principal.
- Acting as a principal means the broker-dealer trades that stock in the OTC market.
Designated Market Makers
- All designated market makers have certain characteristics, except for one.
- The exception is not specified.
Test your knowledge on the third market by identifying the true statements from the options provided. Explore the characteristics and functions of the third market in this quiz.
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