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1. Series 57 Nasdaq

FINRA Series 57 Exam - The Nasdaq Stock Market

QuestionAnswer
The universe of US equities consists of two types of stocks. They are 1. National market system (NMS) stocks, listed on national exchanges and 2. OTC equities, stocks not listed on national exchanges.
Definition of an OTC equity A stock that is not listed on a national stock exchange
A firm that commits its own capital to provide liquidity in a security is called A market maker
Which level of Nasdaq allows a market maker to enter and update quotations? Level 3
The quotes an investor with Nasdaq Level 1 access can see for a given stock are The National Best Bid Offer (NBBO), the highest bid, and the lowest offer.
A market maker quotes a bid for 6 round lots and an ask for 4 round lots of the same stock. How many shares is it willing to sell for its own account or the account of a client? 400. Each round lots represents 100 shares.
Definition of the National Best Bid/Offer (NBBO) The highest bid and lowest offer (ask) for a particular stock.
What does a market maker's ask price indicate? The price the Market Maker is willing to pay to sell at least 100 shares of a security, either for its own account or a client.
A market maker requests registration to make a market in XYZ stock. What is the earliest that the market maker can begin quoting the stock? The same day as registration.
A market maker that requests registration to make markets for a particular stock will go effective on The same day as registration.
A market maker requests registration to make a market in ABC stock. When is the latest that the market maker must begin quoting the stock by? By the open of trading five business days later.
If a market maker requests registration to make a market in DEF stock and fails to begin quoting the stock by the required deadline, what is the result? The exchange will terminate the market maker's registration for that particular stock.
If a market maker wants to provide quotes on four Nasdaq stocks, how many registrations must the firm apply for? Four, one per stock. Market maker registration is on a stock-by-stock basis.
Definition of backing away A violation where a market maker fails to trade at their quoted prices.
Nasdaq market makers' minimum quotation 100 shares (one round lot)
Nasdaq market makers must be prepared to buy or sell at quoted prices. These quotes are called Firm or bona fide quotes.
During what trading hours must Nasdaq market makers maintain firm two-sided quotes? Normal market hours, which are 9:30 am to 4 pm.
Created by: user-2017722
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