When trading securities people don't think much about the order that they've placed. Today many people place orders through an advisor while some prefer to place their orders online. Either way, the order is being routed to a stock exchange. Not all exchanges are created equal and profits can be had by the various prices the same security can be trading on at various markets simultaneously. This technique is called arbitrage.
Let's take one company's stock ? we'll use IBM as our example. IBM trades on many exchanges " the New York Exchange, the American Stock Exchange " many local exchanges across America including Boston, Cincinnati, Chicago, Illinois, LA, Miami, Philly, Salt Lake City, etc. There are also international exchanges all over the place where U.S. securities are traded through depository receipts & basically a clone of the stock that is being tracked, but traded in the currency of the country. Here we trade foreign stocks with ADR's or American Depository Receipts.
People often wonder when I buy or sell a security that is on the other side of that transaction. The answer depends on the type of security you are buying. Stocks, ETF's and closed-end funds all have market makers - a firm responsible for handling the 'inventory' of the security. Some firms have one market maker, others have several. Open end funds (most mutual funds the public is aware of are open end) are sold and redeemed directly through the manufacturer of the fund.
With respect to orders on stocks there are many different types of orders that can be placed on a transaction and a few of them have just been eliminated. Market orders are the most frequent type of orders and they work by transacting the security at the then market price, whatever it may be. Limit orders are orders that are only executed when a specified price has been met and not beforehand, even if it's only 1 penny shy of the limit price. Many times when an order is placed, it isn't filled all at once by one firm. Let's say we're selling 100,000 shares of IBM. It may be sold off in increments depending what the next buyer is looking for. Perhaps the order is filled with the following number of shares & order 1 wants 2000 shares, order 2 wants 60,000 shares, order 3 wants 15000 shares and order 4 completes the order. This can be stopped by adding an 'All or None' provision to the order where nothing will be sold or bought unless the whole lot goes. This trade option has been dissolved by the SEC in a recent ruling beginning October 17th.
Another version of this type or order is called 'Fill or Kill' (this doesn't sound like a typical commission named rule but it has nothing to do with the mafia and nobody gets hurt upon execution ' pun intended) ' this order specifies that when a certain price is hit, fill the entire order or none of it. The SEC also eliminated this option for stock orders after October 17th. The orders are still available to bond trades but will change how stocks are bought and sold. If you had any open orders that fit the description here they've been cancelled.