At the New York Stock Exchange, what is a Specialist? What is their function? Please provide...

At the New York Stock Exchange, what is a Specialist? What is their function? Please provide examples to describe their day to day activities?

Solutions

Expert Solution

Specialist are market makers who facilitates trading activities in certain stocks by posting bid and ask prices during required trading hours.

Functions of specialists:

· They are market makers for a particular stock by quoting best bid ask price

· They maintain fair and orderly market

· They infuse their capital to reduce the volatility in the market

· They remain active in 5-10 stocks mostly

· Provide liquidity

Example:

In a situation of high volatile market, specialists are requested by brokers to enter the market and quote at support and resistant prices of the given stock and reduce the volatility. They just cannot enter market before investors they just support the trading activities by infusing their own capital for that they are compensated handsomely.

As specialist act as buyer and seller they are don’t appear in market all the time. They just act when it is needful and specially on request of the brokers.

jeff jeffy answered 1 year ago

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