• The process of completing an order to buy or sell securities. Once a trade is executed, it is reported by a Confirmation Report; settlement (payment and transfer of ownership) occurs in the U.S. between 1 (mutual funds) and 5 (stocks) days after an order is executed. Settlement times for exchange listed stocks are in the process of being reduced to three days in the U. S.
• The completion of a buy or sell order.
| ||Embedded terms in definition|
| ||Referenced Terms|
| ||Ask price: A dealer's price to sell a security; also called the offer price.This is the price dealers are willing to sell securities at. This is typically higher than the price dealers are willing to buy securities (called bid price). The difference between the ask and bid prices is called the bid-ask spread and represents the profit to the dealer for supplying immediate Execution services.See Ask.|
| ||Bucketing or to bucket trades: Refers to several illegal activities. Most common is the holding of customer orders by a broker who does not report an immediate Execution to the client. In this case the broker would try to take advantage of a known buy (or sell) and do an intermediate trade for himself. For example, a customer gives a market order to buy and the broker executes an immediate transaction. However, the market advances and then the broker sells the instrument at which time he fills the customer order. The client then missed the benefit of the lower price. Sometimes, the term is used for the action of inappropriately using a client's funds for unauthorized trading.|
| ||Commodity year color codes: Are used to distinguish different years available for trading. The following list reflects the 10 year Eurodollar strip. |
- White -Year 1
- Red -Year 2
- Green -Year 3
- Blue -Year 4
- Gold -Year 5
- Purple -Year 6
- Orange -Year 7
- Pink -Year 8
- Silver -Year 9
- Copper -Year 10.
It should be noted that some of these colors have been used for different years by other exchanges over time. Codes are often used in conjunction with other information to avoid errors in order transmission and Execution.
| ||Execution costs: The difference between the Execution price of a security and the price that would have existed in the absence of a trade, which can be further divided into market impact costs and market timing costs.|
| ||Futures commission merchant: A firm or person engaged in soliciting or accepting and handling orders for the purchase or sale of futures contracts, subject to the rules of a futures exchange and, who, in connection with such solicitation or acceptance of orders, accepts any money or securities to margin any resulting trades or contracts. The FCM must be licensed by the CFTC. Related: commission house , omnibus accountIs a firm which is registered to do customer business in the futures and options on-futures business. This customer business relates to the taking of orders for contract Execution.|
| ||Related Terms|
| ||Execution costs|