CIRO Institutional Securities Practice Questions - CIRO Institutional Securities Exam (ISE) Exam

In a principal trade, the dealer commits its own inventory capital to facilitate the trade; in an agency trade, the dealer matches the buyer and seller without taking a position. In an agency trade, the dealer takes a temporary proprietary position to facilitate a block; in a principal trade, the dealer works the order in the market. Principal trades are executed exclusively on dark pools to minimize market impact, while agency trades are routed to lit marketplaces. Agency trades involve charging a markup or markdown on the security's price, whereas principal trades involve charging a transparent commission.