Market Making and Quotations: Rapid Fire

What this video covers

• Why the New York Stock Exchange (NYSE) uses one Designated Market Maker (DMM) per security while Nasdaq and over-the-counter (OTC) markets use multiple competing dealers, and why DMMs act as both agent and principal (never in the same trade)
• Which quotes are binding: firm quotes must execute at price and size; subject, workout, nominal, and bid wanted/offer wanted are non-binding
• Why customers always take the worst side of the spread (buy at the ask, sell at the bid), and why backing away from a firm quote violates just and equitable principles of trade
• The three market-wide circuit breaker levels (7%, 13%, 20%), their 15-minute halt duration, and the 3:25 PM Eastern Time cutoff that disables Level 1 and Level 2 halts
• Why Limit Up-Limit Down (LULD) pauses a single National Market System (NMS) security for 5 minutes, not the whole market, and how its 15-second limit state works
• Which securities trade through TRACE, EMMA, the Trade Reporting Facility (TRF), and the OTC Reporting Facility (ORF), and why municipal bonds never go to TRACE
• Why interpositioning is only a violation if it produces a worse price for the customer, and why penny stock disclosure rules apply only to unlisted OTC securities under $5