MARKET STRUCTURE DICTIONARY

raid  See BEAR RAID.

raider  An operator who attempts to buy enough stock to influence or take control of a particular company. 

railbird  An historic slang term for a speculator who would stand just outside of the rail that formerly encircled (or at least partially encircled) the trading floor of the New York Stock Exchange.  At the time, non-members were allowed to pay an annual fee to enter the exchange to view trading activity, but they were required to stand outside of the rail.  Official term was subscriber.

rainmaker  An individual who brings a substantial amount of new revenue to his firm. 

rally  A relatively sharp recovery in the price of shares following a period of flat or declining prices, as in My guess is this rally has legs.

ramp up  To increase, as in New management wants to seriously ramp up our trading efforts.

range  The difference between the high and low prices during a specific time frame, as in The stock has traded in a two point range today.

ratio strategy  A strategy in which an unequal dollar amount of long and short positions are established. 

re-risk  1. Move from a defensive investment or trading posture to a more aggressive posture.  2.  Per ModernIR:  Adjust hedges.  

reaching for stock  Chasing a rising stock by canceling an away from the market buy limit order and replacing it with a buy order with a higher price.  For example, Unfortunately, my guy was reaching for stock all day and ended up getting plugged at the top.

reaction  A short term reversal in the prevailing trend.  Usually implies a decline in price following a rally.

reactive trader  A trader who responds to trading opportunities presented by others rather than articulating trading interest himself.   

reading the tape  1.  Watching the ticker tape to ascertain prices.  2.  Watching the ticker tape in an attempt to forecast short term price movements.

real  1.  A synonym for natural.  For example, I see you indicated as a buyer in XYZ.  Are you real or just fishing?  2.  A synonym for large.  For example, I see you indicated as a large buyer in XYZ.  If you’re real, we might be able to write a ticket.

real market  Quotes provided by dealers willing to trade in relatively large size.  For example, It looks like the inside market in ZVZZT is $25.10-$25.11, 100 shares up.  Any idea what the real market is?

real time  A price or a quote that is current, not delayed. 

real time trade reporting  A requirement that market makers (and sometimes order entry firms) report trades immediately following execution.  See also TRADE REPORTING.

realize  To close a position in order to monetize paper profits or losses.

realized spread  A transaction cost estimate.  Essentially equals twice the difference between the actual trade price and the quotation midpoint as observed at some point in time following the trade. 

rebalancing  Realigning the components of a portfolio or an index. 

rebate  A partial refund of per share fees granted by exchanges and electronic communications networks to traders who post liquidity within their systems.  See also TAKE FEE.

rebate capture  A HIGH FREQUENCY TRADING strategy in which computers are programmed to conduct AUTOMATED MARKET MAKING activities in a particular market center in large part to receive liquidity rebates from the chosen venue.

rebate trading  A HIGH FREQUENCY TRADING strategy in which computers are programmed to conduct AUTOMATED MARKET MAKING activities in a particular market center in large part to receive liquidity rebates from the chosen venue.

rebound  A price increase following a price decline, as in The market rebounded sharply following the jobs report.

receive against payment  See RECEIVE VERSUS PAYMENT.

receive versus payment (RVP)  An instruction that stipulates only cash will be accepted as payment for shares upon settlement.

reciprocal business  The practice of directing orders from one broker/dealer to another with the understanding that similar business will in turn be directed back to the original broker/dealer.

record high  The highest price at which a stock or an index has historically traded, as in Today, XYZ broke out to a new record high on huge volume.

record low  The lowest price at which a stock or an index has historically traded, as in With bankruptcy imminent, ZVZZT traded to a new record low yesterday.

recovery  An upward movement in the price of shares following a decline, as in Shares finally saw a recovery today after four straight losing sessions.

red (on my screen)  A slang term for stocks with prices that are negative on the day.  Derived from the color used by most interrogation devices to identify such stocks.  For example, There is definitely a lot of red on my screen today.  The market is really getting hammered.  As opposed to the more commonly used term GREEN (ON MY SCREEN).

red, in the  Show a loss.

REDIPlus  An electronic communications network developed by Spear, Leeds & Kellogg in 1992.  It is currently owned and operated by Goldman Sachs. 

Reg NMS  The commonly used abbreviation for Regulation NMS.

reg rep  An abbreviation for registered representative.

regional stock exchanges  Registered stock exchanges located outside of New York City.  Historically, many areas of the country maintained their own stock exchange.  These exchanges served two primary functions.  First, they provided a marketplace for the shares of companies that had geographically limited operations.  Second, they allowed national companies to geographically broaden their shareholder base.  The list of regional stock exchanges dwindled as the 20th century progressed and very few exist today as independent entities.

registered competitive market maker  1.  An independent FLOOR TRADER at the New York Stock Exchange.  Such individuals are expected to help stabilize the market during times of order imbalance.  Also known as a registered competitive trader.  2.  An over-the-counter market maker registered with FINRA.

registered competitive trader  An independent FLOOR TRADER at the New York Stock Exchange.  Such individuals are expected to help stabilize the market during times of order imbalance.  Also known as a registered competitive market maker.

registered exchange  A securities exchange that is officially registered with the Securities and Exchange Commission.  Also known as a national securities exchange.

registered investment firm  An investment firm that is registered with the Securities and Exchange Commission. 

registered representative  1.  An individual stockbroker who is registered with FINRA to handle customer accounts.  Also known at various times as a customer's man, an account executive, or a reg rep.  2.  Any individual who has passed the Series 7 examination and is therefore registered with FINRA as a General Securities Registered Representative. 

registered secondary offering  An offering of a very large block of previously issued shares that have been officially registered with the SEC. 

registered shares  Shares that have been issued in the name of a particular shareholder. 

registered trader  See registered competitive trader.

registrar  A financial institution appointed by an issuing company to record the ownership of its securities. 

registration  The filing and review process required by the Securities and Exchange Commission prior to offering a new issue to the public. 

regular lot  The exchange determined standardized number of shares in a single trading unit.  Usually 100 shares.  Also known as a board lot, an even lot, a full lot, or a round lot.

regular member  A full member of a securities exchange.  Entitled to all of the privileges and subject to all of the rules of that exchange. 

regular trading hours  Generally speaking, the time from 9:30am to 4:00pm ET. 

regular trading session  The trading session that determines the official opening and closing prices for a particular exchange.  For the New York Stock Exchange and NASDAQ, the time from 9:30am to 4:00pm ET. 

regular way   1.  In the equities market, a trade that is due to settle on the third business day after the trade occurs.  2.  A long sale.

Regulation FD  A Securities and Exchange Commission regulation that forbids the selective disclosure of nonpublic information by corporations. 

Regulation National Market System  See Regulation NMS.

Regulation NMS (Reg NMS)  A series of regulations adopted by the Securities and Exchange Commission in 2005 (and implemented in 2007) ostensibly to homogenize the prices of individual stocks across trading venues.  Has had a significant impact on market structure, and given technological advances, ultimately fostered a market dominated by various forms of algorithmic trading (including high frequency trading).  See also ORDER PROTECTION RULE, ACCESS RULE, MARKET DATA RULES, and SUB-PENNY PRICING.

Regulation T  A Federal Reserve Board regulation that governs the extension of credit to customers by broker/dealers. 

rejected order  An order that is returned to the customer unexecuted because it is invalid or unacceptable in some way. 

rejection  A refusal to accept delivery of a questionable stock certificate.

relative strength  The price movement of one stock or index compared to the price movement of another stock or index. 

relative value arbitrage  A strategy used to exploit perceived mispricings of relative valuation differentials between two correlated financial instruments.  The relatively cheap instrument is purchased while the relatively expensive instrument is sold.  The trade is profitable when prices converge.  Also known as PAIRS TRADING.  

release  To relieve a potential party to a trade from any further obligations.

reload  To increase the size of an existing order.  Often implies an increase directly proportional to the original size of the order.  For example, ZVZZT, I see we're done on 50,000.  I'm reloading you with another fifty, same way.

Reminiscences of a Stock Operator  Classic 1923 autobiography of notorious speculator Jesse Livermore, co-written by Livermore and collaborator Edwin Lefevre.  Nearly universally cited in trading circles as the one "must read" book on trading..  

reopening  The opening of trading in a specific stock following an intraday trading halt.

report  A written, electronic, or verbal confirmation of the execution (or partial execution) of an order.  At a minimum, includes quantity and price.  For example, Take a report, you bought 25,000 XYZ at an average price of $50.1016.

report to buy  A customer expression that means "check on the status of my existing buy order."  Often implies that the customer believes he is due at least a partial execution.  For example, Report to buy 10,000 XYZ at $50.  It looks like it's been trading there.

report to sell  A customer expression that means "check on the status of my existing sell order."  Often implies that the customer believes he is due at least a partial execution.  For example, Report to sell 25,000 ZVZZT at $25.  It looks like it's been trading there.

reporter  See FLOOR REPORTER.

repurchase of stock  The purchase of previously issued shares by the issuing corporation itself.  Repurchased shares become treasury stock. 

request for a report  A customer request for the status of an existing order.  See REPORT TO BUY and REPORT TO SELL.

research sales  The department of a broker/dealer responsible for the dissemination of the firm's research product to institutional investors.  Also known as institutional sales.

research salesperson  A registered representative at a broker/dealer whose customer base is primarily comprised of institutional investors. 

reserve   The portion of a limit order in an electronic communications network that cannot be viewed by other market participants.  Also known as hidden reserve. 

reserve order  A limit order entered into an electronic communications network that makes only a small quantity visible to other market participants but holds the majority of the order hidden from view yet accessible for execution. 

resistance  An increase in the supply of shares for sale at a particular price level, as in XYZ, we keep seeing resistance up at the $50 level.

resistance level  A price level at which the supply of shares for sale tends to halt a price advance.  A price ceiling.  For example, XYZ, $50 seems to be a fairly significant resistance level.  If we get though there, I bet we trade higher.

restricted list  A list of stocks maintained by a broker/dealer in which trading operations are restricted.  The firm's traders may not hold positions, solicit orders, or provide indications of interest in these stocks.  However, they may facilitate the execution of unsolicited customer orders on an agency basis.   

restricted securities  Securities issued privately and without a registration statement by a corporation under Securities and Exchange Commission Rule144.  May not be sold publicly without first establishing an exemption from SEC regulations.

resume trading  To reopen trading following a trading halt, as in Trading in ZVZZT is set to resume at 11:00am ET.

retail ahead  Market maker lingo that basically means "I will not trade with you at my quoted price because I have already traded with a customer at that price very recently."  For example, ZVZZT, ten at a quarter, news out. --- Retail ahead at a quarter.  I'm eighth best now.  See also COMPETITION AHEAD and LATE TO.

retail brokerage (house)  A brokerage firm whose customer base is comprised mainly of small individual investors.  As opposed to a firm whose customers are mainly other broker/dealers (see WHOLESALE MARKET MAKER) or institutional investors (see INSTITUTIONAL BROKER).  

retail investor  A small individual investor.  As opposed to a BROKER/DEALER or an INSTITUTIONAL INVESTOR. 

retention stock  Shares of a new issue that are allocated to syndicate members.  Does not include shares retained by the syndicate manager to allocate to institutional investors and non-member firms. 

retracement  A reversal in the prevailing price trend, as in Unfortunately, we may see a full 50% retracement of the last rally.

return  The profit or loss from an investment over a given period of time. 

Reuters  A prominent international news, information, and quotation service operated by Thompson Reuters. 

reversal  A change in the prevailing trend.  Also known as trend reversal.

reverse stock split  A reduction in the number of shares outstanding of a particular corporation with a proportional increase in the price of the remaining shares.  Net neutral to market capitalization.

revised quote  A quote provided by a dealer that supersedes his previous quote. 

rich  Describes a stock that is perceived to trade at an unjustifiably high price.  For example, XYZ is getting a little rich for me.  I think I'll wait and see if it comes in some.

rig  A London term for corner.

rigged market  A manipulated market.

right  See GET RIGHT.

right here  An industry term for "at the current inside market," as in ZVZZT, I'd sell you 50,000 right here.

ring  A clique of speculators buying or selling simultaneously in order to affect prices.   

ring the cash register  Make a profit, as in If this XYZ trades works out like I think it will, I'm gonna be ringing the cash register.

risk arbitrage  1)  Merger arbitrage.  In a deal involving shares, the simultaneous purchace of the acquireree and sale (or short sale) of the acquirer.  2)  STATISTICAL ARBITRAGE.  See also ARBITRAGE.  

risk management  1.  The process of identifying and analyzing risk exposure in order to determine whether to accept the risk, mitigate the risk, or increase the risk.  See also HEDGE.

riskless principal transaction  A trade in which a dealer establishes a position in order to satisfy an existing customer order.  Specifically, the dealer sources liquidity from the market (or from another customer if the trade is a cross), places the shares into his proprietary trading account, and subsequently executes the customer order at the same price from the proprietary account.  Such trades are reported only once to the tape even though technically at least two separate transactions have been made.  Usually a commission equivalent is charged, not a markup or markdown.  See also RISKLESS TRANSACTION.

riskless transaction  A general term for a trade in which a dealer establishes a position in order to satisfy an existing customer order.   Usually a markup or markdown is added to the position price, which differentiates a riskless transaction from a RISKLESS PRINCIPAL TRANSACTION.   Also known as a simultaneous transaction. 

robots  A slang term for HIGH FREQUENCY TRADING programs.

rock bottom  An absolute low in prices, as in If this isn't rock bottom, then the market really is going to zero.

rogue trader  A professional trader employed by a financial institution who makes very large, often reckless trades that serve his own purposes but that are not in the best interests of his firm.

room  Trader's jargon for an increase in the price of a buy limit order or a decrease in the price of a sell limit order.  For example, Sell 50,000 ZVZZT with a $25 low.  Let me know if it’s not working, I might be able to give you some room.

room trader  Another term for floor trader.

rotation  An investment strategy in which managed assets are periodically shifted between investment styles (Growth, GARP, etc.) or between sectors in an attempt to generate above market returns..  

round lot  The exchange determined standardized number of shares in a single trading unit.  Usually 100 shares.  Also known as a board lot, an even lot, a full lot, or a regular lot.

round transaction  A transaction that has been initiated and then closed.  See also ROUND TRIP and ROUND TURN.

round trip  A complete trade consisting of the purchase and sale of a particular stock, as in I just round tripped 25,000 ZVZZT, made a quarter.  Also known as a round turn.

round turn  A complete trade consisting of the purchase and sale of a particular stock, as in I just round turned 25,000 ZVZZT, made a quarter.  Also known as a round trip.

routing  Forwarding orders to the appropriate execution venue.  See also ORDER ROUTING SYSTEM.

Rule 10b-5  A Securities and Exchange Commission rule that prohibits insider trading based on material nonpublic information. 

Rule 10b-6  A Securities and Exchange Commission rule that prohibits any firm participating in a secondary distribution from bidding for (or buying) those (or similar) shares in the open market until their participation in the distribution is over.  The Rule makes an exception for PASSIVE MARKET MAKING activities. 

Rule 144 (Stock)  Securities issued privately and without a registration statement by a corporation under Securities and Exchange Commission Rule 144.  Also known as restricted securities.

Rule 15c3-1  A Securities and Exchange Commission rule that stipulates the minimum capital required to be held by a broker/dealer.  Also known as the net capital requirement rule.

Rule 19b-3  A Securities and Exchange Commission rule that prohibits the fixing of commission rates. 

Rule 19c-3 (Stocks)  Stocks listed on a national securities exchange after April 26, 1979.  Such stocks were exempt from exchange rules that prohibited members from conducting off-board trades in exchange listed stocks.  Named for Securities and Exchange Commission Rule 19c-3 that specifically allowed off-board trading.

Rule 390  A New York Stock Exchange rule that severely limited the ability of members to trade NYSE listed securities off-board without first presenting the orders to the floor for possible execution.  The Rule was deemed anticompetitive by the Securities and Exchange Commission who chipped away at it over the course of many years.  The NYSE eventually repealed the Rule entirely in May of 2000. 

Rule 610  See ACCESS RULE.

Rule 611  See ORDER PROTECTION RULE.

Rule 612  The rule in Regulation NMS that prohibits SUB-PENNY PRICING in stocks priced over $1.

rumor  Hearsay or unfounded gossip.

rumormonger  A PARASITIC TRADER who attempts to profit by spreading misinformation.  

rumortrage  Trading based on takeover speculation.

run  1.  A price movement in the same direction over a period of time, as in XYZ has certainly had a nice run.  2.  A dealer's list of stocks and quotes.  3.  A comprehensive list of trading activity.  See also BLOTTER and PAD.

run for the hills  Exit long positions as rapidly as possible, as in This time it looks like even the vanilla guys are running for the hills.

run over  To trade with a customer on terms that subsequently prove to be quite unfavorable.  Often implies that the customer was in ex ante possession of superior information.  For example, Charlie just ran us over again, this time in ZVZZT.  That's it … they get no more capital until they get their loss ratio under 30%.

run up  A rapid, and sometimes unexpected, rise in share prices, as in The market really had a serious run up into the elections.

runner  A messenger employed by a broker/dealer or by an exchange.

running ahead  The illegal act of positioning stock in a personal or proprietary account before executing a customer order.  Also called going ahead.

RVP  An abbreviation for receive versus payment.