Chapter 4 - CISI IT
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What is the second stage of a client order after the order was placed?
Confirmation
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What are the first two stages of portfolio management?
determining and understanding client objectives & formulating an investment policy
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What does market data provide?
information about current market prices and liquidity on various exchanges
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What is a PRE-TRADE COMPLIANCE?
The need of buy-side firms to ensure the order is compatible with the customer's investment objectives, time horizon's and risk appetite
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What is "At Best or At Market" order?
Buy or sell at the best available price the member firm can obtain at the time
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What is a "LIMIT" order?
If selling to not sell for a price lower than x / if buying do not buy for a price higher than x
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What is a "GOOD UNTIL CANCELLED" order?
There is no time limit on this order
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What is a "STOP LOSS" order?
sell if and when the market price falls to this level
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What is an "EXPIRY DATE" order?
if the order cannot be filled by this date then it should be treated as cancelled
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What is a "FILL OR KILL" order?
either complete the order in full or reject it
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When would a "hub and spoke" third party order routing service be used?
When order details are being entered directly into the sell-side firm's order management system
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What is FIX?
Messaging standard developed specifically for real-time electronic exchange of securities transactions- public domain.
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If a sell-side firm is filling the order as an agent, where will it forward the order to?
an investment exchange and charge the investor a commission
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Where will the sell-side firm forward an order if it is trading as principle?
NOT the exchange - forwards to investor and sells them the required quantity from its own book or position / if buy, then buys the stock from the investor and add its to their own book
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How do sell-side firms make money from trading as principle?
buying price - selling price
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What type of financial instrument only trades as agent?
Futures & Options
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What types of financial instrument can trade as principle OR agent?
Equities
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What is an example of an electronic trade confirmation systems?
Omgeo developed by Thomas Reuters
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What are Dealing Systems?
mission critical systems which require handling of occasional surgers of volume without degraded response times
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Income and capital gains tax computation is a function in a Dealing System required by which side?
Buy-side
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Commission and charges calculation is a function in a Dealing System required by which side?
Sell-side
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The ability to market-to-market is a function in a Dealing System required by which side?
Sell-side
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The ability to receive real-time data feeds & have broker connectivity is a function in a Dealing System required by which side?
Buy-side
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A FLAT FEE is typically used by who?
exeuction only stockbrokers that serve private investors
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A PERCENTAGE calc method is used by who?
Equity
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A BASIS POINTS (Bp) is a calc method used by who?
Bond & OTC Derv
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What is Algorithmic Trading?
Use of computer programs for entering orders where the computer decides on aspects of the order such as price and quantity, some cases initating the order without human interaction
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Who is algorithmic trading widely used by?
Fund managers to divide large trades into smaller trades in order to manage market impact and risk.
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How fast can high-frequency trading process trades?
within milliseconds
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Why has SEC introduced a new system called "limit-up/limit-down"?
To reduce the number of halts in "circuit breakers"
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What is Direct Market Access (DMA)?
automated process of touring securities orders directly to an execution venue - allows buy-side firms to place orders directly on to the order queues of investment exchanges
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Other cards in this set
Card 2
Front
What are the first two stages of portfolio management?
Back
determining and understanding client objectives & formulating an investment policy
Card 3
Front
What does market data provide?
Back
Card 4
Front
What is a PRE-TRADE COMPLIANCE?
Back
Card 5
Front
What is "At Best or At Market" order?
Back
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