General Securities Sales Supervisor (Series10) Practice Exam

Which orders are permitted to be entered into the NASDAQ System?

1. Riskless principal trade and agency orders only

2. Marketable limit order and proprietary orders only

3. Riskless principal trade, marketable limit order, and agency orders

4. All of the above

The correct answer is: All of the above

The NASDAQ System is designed to facilitate various types of orders, which allows for a diverse trading environment. Among these are riskless principal trades, marketable limit orders, agency orders, and proprietary orders. Riskless principal trades involve a broker buying securities and then immediately selling them to a client, ensuring that the broker does not take on any market risk. Marketable limit orders allow an investor to specify a maximum price they're willing to pay or a minimum price they're willing to accept, facilitating trades at the best available prices. Agency orders are those in which the broker acts on behalf of a client, while proprietary orders are those where the broker is trading on their own behalf. Permitting all these orders into the NASDAQ System allows for comprehensive trading strategies and ensures that various market participants can effectively engage in buying and selling. This broad inclusion helps maintain market liquidity and facilitates the execution of trades across different strategies and market conditions. Thus, all the types of orders mentioned are allowed, making the choice that encompasses all options the correct one.