Brokers:
· Fill order for clients
· Do not trade, but search for traders who are willing to take the other side of their client’s order
· Can be individual or from a large brokerage firm or from a bank or at exchanges
· Identifies potential trade for clients which reduces the cost the costs of finding counterparts for their traders
· Block traders: provide brokerage service to large clients. Large trade is difficult to get. A large buy Trading goes at a premium to the current market price and large sell trading goes at a discount to the current market price. Price concession enhances large, trading, revealing such large trade makes trader reluctant which handled by block traders.
Exchanges:
· Provides a place where traders can meet to arrange trades, e.g. NYSE-Euronext, Eurex, Tokyo stock exchange, etc. Exchange floor is where a broker and dealer negotiate. Exchanges arrange trades for traders based on orders that broker and dealer submit to them. Such exchanges essentially act as broker. Most use an electronic order matching system to arrange the trades.
· Regulates operation separates exchanges to broker. Most of exchanges regulate their member’s behavior when trading on or off an exchange.
· Regulate the issuers that list their security of the exchanges. These regulations require timely financial disclosure which is the information to value the securities in the market.
· Derive their regulatory authority from their national or regional government, or through the voluntary agreement of their member and issuers to subject themselves to the exchange regulation. In most country government regulators oversee the exchange rule and regulatory operation. Most counties also impose financial disclosure standards on public issuers.
· Alternative trading system ATSs functions same as exchange, but do not exercise regulatory authority over subscriber, except with respect to the conduct trading in their trading system, any electronics. Other operating innovative trading system based information on the customer and their preference. Many ATSs known as dark pools because they do not display that their clients send to them.
Dealers:
· Fill their clients’ orders from trading with them. If clients are willing to sell or buy then dealer will be a buyer or seller respectively.
· Liquidity is ability to buy or sell with low transaction costs, which is provided by the dealer at trading time to the client.
· In over-the-counter market client ask the dealer to trade, but in exchange it is open.
· Dealers operation: proprietary trading house, investment banks, hedge funds, sole proprietorship. Large dealing companies: RBC capital market, Nomura timber hill knight securities, IG group etc.
· Primary dealer: deal with the central bank when conducting monetary policy. They buy bonds, notes, bills when CB wants to reduce money supply. Dealers sell them to their clients. When CB wants to increase money supply, they get back all these instruments.
· Fill order for clients
· Do not trade, but search for traders who are willing to take the other side of their client’s order
· Can be individual or from a large brokerage firm or from a bank or at exchanges
· Identifies potential trade for clients which reduces the cost the costs of finding counterparts for their traders
· Block traders: provide brokerage service to large clients. Large trade is difficult to get. A large buy Trading goes at a premium to the current market price and large sell trading goes at a discount to the current market price. Price concession enhances large, trading, revealing such large trade makes trader reluctant which handled by block traders.
Exchanges:
· Provides a place where traders can meet to arrange trades, e.g. NYSE-Euronext, Eurex, Tokyo stock exchange, etc. Exchange floor is where a broker and dealer negotiate. Exchanges arrange trades for traders based on orders that broker and dealer submit to them. Such exchanges essentially act as broker. Most use an electronic order matching system to arrange the trades.
· Regulates operation separates exchanges to broker. Most of exchanges regulate their member’s behavior when trading on or off an exchange.
· Regulate the issuers that list their security of the exchanges. These regulations require timely financial disclosure which is the information to value the securities in the market.
· Derive their regulatory authority from their national or regional government, or through the voluntary agreement of their member and issuers to subject themselves to the exchange regulation. In most country government regulators oversee the exchange rule and regulatory operation. Most counties also impose financial disclosure standards on public issuers.
· Alternative trading system ATSs functions same as exchange, but do not exercise regulatory authority over subscriber, except with respect to the conduct trading in their trading system, any electronics. Other operating innovative trading system based information on the customer and their preference. Many ATSs known as dark pools because they do not display that their clients send to them.
Dealers:
· Fill their clients’ orders from trading with them. If clients are willing to sell or buy then dealer will be a buyer or seller respectively.
· Liquidity is ability to buy or sell with low transaction costs, which is provided by the dealer at trading time to the client.
· In over-the-counter market client ask the dealer to trade, but in exchange it is open.
· Dealers operation: proprietary trading house, investment banks, hedge funds, sole proprietorship. Large dealing companies: RBC capital market, Nomura timber hill knight securities, IG group etc.
· Primary dealer: deal with the central bank when conducting monetary policy. They buy bonds, notes, bills when CB wants to reduce money supply. Dealers sell them to their clients. When CB wants to increase money supply, they get back all these instruments.
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