Specialist

Specialist

On an exchange, the member firm that is designated as the market maker (or dealer for a listed common stock). Member of a stock exchange who maintains a "fair and orderly market" in one or more securities. 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 OTC market. Major functions include executing limit orders on behalf of other exchange members for a portion of the floor broker's commission, and buying or selling for the specialist's own account to counteract temporary imbalances in supply and demand and thus prevent wide swings in stock prices.

Specialist

A member firm on a securities exchange that the exchange's management charges with keeping a fair and orderly market on one or more securities. That is, a specialist serves as a market maker on its assigned securities by buying and selling them to ensure liquidity in the market. Brokers approach specialists to conduct to conduct transactions on their assigned securities. Each security on the exchange has exactly one specialist. A specialist is less commonly called an assigned dealer. See also: Book.

specialist

A member of a securities exchange who is a market maker in one or more securities listed on the exchange. The specialist is the person on the exchange floor to whom other members go when they wish to transact or leave an order. Specialists are assigned securities by the exchange and are expected to maintain a fair and orderly market in them. Also called assigned dealer. See also book, Rule 104.

Specialist.

A specialist or specialist unit is a member of a securities exchange responsible for maintaining a fair and orderly market in a specific security or securities on the exchange floor.

Specialists execute market orders given to them by other members of the exchange known as floor brokers or sent to their post through an electronic routing system.

Typically, a specialist acts both as agent and principal. As agent, the specialist handles limit orders for floor brokers in exchange for a portion of their commission.

Those orders are maintained in an electronic record known as the limit order book, or specialist's book, until the stock is trading at the acceptable price. As principal, the specialist buys for his or her own account to help maintain a stable market in a security.

For example, if the spread, or difference, between the bid and ask, or the highest price offered by a buyer and the lowest price asked by a seller, gets too wide, and trading in the security hits a lull, the specialist might buy, sell, or sell short shares to narrow the spread and stimulate trading.

But because of restrictions the exchange puts on trading, a specialist is not permitted to buy a security when there is an unexecuted order for the same security at the same price in the limit order book.