Demo article created to preview the Explainers section.
Placing a stock order starts a process that connects your brokerage account with trading venues and the firms that handle the exchange of shares and money. The trade you see on a screen is one stage in that process.
Your broker first receives and reviews the instruction, then determines where to execute it. An order can go to an exchange or another trading venue, while some firms can fill orders themselves. FINRA’s explanation of the trade lifecycle sets out these different routes.
Execution occurs when the order is filled. That outcome is not automatic: an order may be partly filled or remain unfilled if its terms cannot be met. A limit order, for example, sets a price condition.
After execution, clearing checks that the parties’ trade details agree. Settlement completes the transfer of the shares and the corresponding payment. The confirmation of an execution and the completion of settlement describe different stages.
Many U.S. investors hold shares in street name: an intermediary appears on the company’s register, while the broker records the investor as the beneficial owner. Direct registration instead records the investor’s name on the issuer’s books. The way shares are held determines which organization maintains that ownership record.