Specialist
Market Microstructure glossary · Market Microstructure Fundamentals
Definition
A designated market maker on the NYSE (historically) who had both an obligation to maintain orderly markets and the privilege of seeing all order flow in assigned securities.
Specialist in plain English
For most of the NYSE's history, each stock was assigned one official dealer called a Specialist who stood at a physical post on the trading floor. Their job was a two-sided bargain: they had a DUTY to keep trading smooth — stepping in to buy when everyone was selling (and vice versa) so prices didn't lurch wildly — and in exchange they got the PRIVILEGE of seeing every buy and sell order flowing into that stock, a powerful information edge. It's a bit like the one referee who can see all the players' cards: they must keep the game fair, but they also know things nobody else does. Computers have largely replaced this role today.
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