Statement 5
The high-touch agency approach is typically used to execute large, non-urgent trades in fixed-income and exchange-traded derivatives markets.
my question is, why is this incorrect?
(Institute 169)
Institute, CFA. 2020 CFA Program Curriculum Level III Volume 6 . CFA Institute, 08/2019. VitalBook file.
The citation provided is a guideline. Please check each citation for accuracy before use.
High-touch is used for generally illiquid securities. Exchange-traded derivatives tend to be very liquid.
See the correct statement would be :-
“The High touch agency approach is typically used to execute large,non urgent trades in fixed income and OVER THE COUNTER DERIVATIVES MARKET.” The reason for being wrong is the issue pertaining to high touch being used majorally for illiquid orders but exchange traded Derivatives is a highly liquid driven market.
Hope it would be of help to you!