Lecture 4.4 How People Trade

Summary

This video explores the complexities of the U.S. equity markets, covering the various ways retail investors access stocks, including brokers, mutual funds, and exchange-traded funds (ETFs). It delves into how orders are sometimes internalized by brokers and the role of the National Market System (NMS) in regulating competing exchanges like NYSE and NASDAQ. The video also discusses market liquidity, trading costs, and the crucial role of the DTCC in clearing trades. The GameStop incident highlights the risks of margin requirements and central clearing, offering a real-world example of market challenges faced by brokerages.