Specialist Glossary Definition
(1) On an exchange, the member firm that is designated as the market maker or dealer for a listed common stock. Only one specialist can be designated for a given stock, but dealers may be specialists for several stocks. In contrast, there can be multiple market makers in the over-the-counter market.
(2) A member of the New York Stock Exchange who has two functions:
(a) To maintain an orderly market, insofar as reasonably practicable, in the stocks in which he is registered as a specialist. In order to maintain an orderly market, the Exchange expects the specialist to buy or sell for his own account, to a reasonable degree, when there is a temporary disparity between supply and demand.
(b) To act as a broker’s broker. When a commission broker on the Exchange floor receives a limit order, say, to buy at $50 a stock then selling at $60 -- he cannot wait at the post where the stock is traded to see if the price reaches the specified level. So he leaves the order with the specialist, who will try to execute it in the market if and when the stock declines to the specified price. At all times, the specialist must put his customers’ interests above hisFree Daily Hedge Fund Newsletter
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