Question

"An order for a New York Stock Exchange listed issue is routed by the member firm to a Third Market Maker rather than to the exchange floor. This practice is:"

Answer 1

Answer: Permitted if the price offered by the Third Market Maker is better.

Explanation:

The Securities and Exchange Commission (SEC) requires that when executing trades, the trader should seek for execution at the best market. This means that the trader should trade in the market that is most price efficient.

Should the stock in question be available for trade in various markets, best practice would indicate that the dealer find the market that is offering the best prices and route the order to it.