Investments, tenth edition

3.3 

  Trading Mechanisms 

 An investor who wishes to buy or sell shares will place an order with a brokerage firm. 

The broker charges a commission for arranging the trade on the client’s behalf. Brokers 

have several avenues by which they can execute that trade, that is, find a buyer or seller and 

arrange for the shares to be exchanged. 

 Broadly speaking, there are three trading systems employed in the United States: over-

the-counter dealer markets, electronic communication networks, and specialist markets. 

The best-known markets such as NASDAQ or the New York Stock Exchange actually use 

a variety of trading procedures, so before you delve into specific markets, it is useful to 

understand the basic operation of each type of trading system.