A broker-dealer filling a customer order for an NYSE stock out of inventory is known as a:

A 1st market transaction refers to trading on a national stock exchange, such as the NYSE or Nasdaq. This involves buying and selling of securities between sellers and buyers through a designated market maker. A 2nd market transaction refers to trading on the over-the-counter market, outside of major exchanges. A 4th market transaction refers to direct trading between large institutional investors, bypassing traditional market makers. As for the term "broker-dealer", it refers to a financial firm that acts as both a broker (matching buyers and sellers) and a dealer (buying and selling securities for its own account). Therefore, a broker-dealer filling a customer order with its own inventory is known as a 3rd market transaction. This means that the firm is buying the security from its own inventory and selling it to the customer. This type of transaction is also known as a principal transaction.