Uniform Securities Agent State Law (Series 63) Practice Exam

In which market does a dealer primarily operate?

1. Nasdaq exchange

2. Over-the-counter market

3. Citadel market

4. New York Stock Exchange

The correct answer is: Over-the-counter market

A dealer primarily operates in the over-the-counter market, which is characterized by trading that occurs directly between two parties, often facilitated by a dealer. Dealers play a crucial role in this market by buying and selling securities for their own accounts, providing liquidity, and facilitating transactions between buyers and sellers who may not find each other easily in a traditional exchange setting. In the over-the-counter market, dealers can execute trades more flexibly compared to exchanges, which have more stringent listing and trading requirements. This environment allows for a broader range of securities, including those that may not meet the requirements for listings on formal exchanges. Because a dealer's primary function revolves around these activities and the nature of the over-the-counter market itself, this choice accurately reflects the operational focus of a dealer.