The main characteristics of exchange markets can be classified into:
· Exchange membership
· Types of orders
· Market makers
Exchange Membership in US
· Specialist- market maker that control limit order trades
· Commission borker- employees of a member firm that is a member of the exchang and buy/sell for the clients of the firm
· Floor traders- not employees of a member firm, as freelance brokers for other commission brokers
· Registered traders-independent, trade for their own account.
Market makers:
Market makers facilitate the trading in a stock, buying and selling stock from their own accounts in order to maintain orderly trading and provide liquidity, manage the limit order book where both limit and stop orders are recorded. Also known as a specialist in US.
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