Definition of Level Two

Level Two is a NASDAQ workstation service that allows the order entry firm to see the inside market, the quotes entered by all market makers and execute orders.

Applying "Level Two" to Securities Exams:

Level Two NASDAQ service allows broker dealers who are not registered as market makers to see the bids and offers off all market makers and ECNs. Level two allows the order entry firm to see the inside market as well as the depth of the market at various prices away from the inside market. Level two allows the order entry firm to execute orders against the quotes displayed in the NASDAQ market by market makers and ECNs.

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