In the U.S., transactions in each stock that’s
traded on an exchange floor go through a single specialist, sometimes
called a broker to brokers. Each specialist, who usually handles
more than one stock, is stationed at a particular place, called
a trading post, on the exchange floor. Any floor broker wanting
to buy or sell a stock heads for the appropriate specialist. While
a buyer and a seller might strike a deal on their way to the post,
most bidding occurs at the post.
On the
NYSE,
orders placed electronically using the
direct
order turnaround (DOT)
system are routed directly to the
specialist rather than to a floor broker. Details on the volume
and price of all trades are displayed on constantly updated electronic
boards near each specialist’s post.
If there’s more buying than selling,
or vice versa, specialists may act as
dealers,
and buy or sell
to complete a transaction. That’s because specialists are
responsible for maintaining an orderly market in their securities
and for helping to keep the market liquid.
