How securities are traded - U.S. securities markets

4 important questions on How securities are traded - U.S. securities markets

What is a program trade?

A program trade is a coordinated purchase or sale of an entire portfolio of stocks.

What is a street name?

This means the broker holds the shares registered in the firm’s own name on behalf of the client.

What is a clearinghouse?

The trades of all exchange members are recorded each day, with members’ transactions netted out, so that each member need transfer or receive only the net number of shares sold or bought that day. A brokerage firm then settles with the clearinghouse instead of individually with every firm with which it made trades.
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What kind of risk are bond markets subject to?

The corporate bond market often is quite “thin,” in that there may be few investors interested in trading a specific bond at any particular time. As a result, the bond market is subject to a type of liquidity risk, for it can be difficult to sell one’s holdings quickly if the need arises.

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