The specialist / DMM is also required to execute orders that have been left with them. Orders that have been left with the specialist / DMM for execution are said to be “left or dropped on the specialist’s / DMM’s book”. The specialist / DMM is required to maintain a book of public orders and to execute them when market conditions permit. The types of orders that may be left with the specialist are:

  • Buy and Sell limit orders
  • Stop orders
  • Stop Limit orders
  • Both day and GTC orders
  • AON orders

The specialist / DMM will execute the orders if and when they are able to and will send a commission bill to the member who left the order with them for execution. This is known as a specialist bill and is usually only a cent or two per share. The specialist / DMM is also required to quote the best market for the security to any party that asks. The best or inside market is comprised of the highest bid and lowest offer. This is made up from bids and offers contained in the specialist’s / DMM’s book and in the trading crowd. The inside market is also the market that is displayed to broker dealers and agents on their quote system.

When quoting the inside market the specialist / DMM will add all of the shares bid for at the highest price and all of the shares offered at the lowest price to determine the size of the market. There are certain types of orders that are not included when determining the inside market they are:

  • Stop orders
  • All or None orders

Need Help Passing The Series 57 Exam?



Do Not Reduce / DNR

Related Articles
  1. Personal Finance

    Do You Need a Specialist to Manage Investments?

    Seek out an advisory firm that truly specializes in serving the unique needs of your family.
  2. Trading

    High-Frequency Trading: A Primer

    An in depth look at how high-frequency trading works and who the players are.
  3. Trading

    Know Your Counterparty When Day Trading

    This can provide insight into how the market is likely to act based on your presence, orders and transactions.
  4. Trading

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  5. Investing

    Explaining Market Orders

    A market order is the most common order used to purchase a financial security.
Frequently Asked Questions
  1. Where else can I save for retirement after I max out my Roth IRA?

    The first option to explore is to determine if you can contribute to a 401(k), 403(b), or 457 plan at work. If your employer ...
  2. How did George Soros "break the Bank of England"?

    In Britain, Black Wednesday (September 16, 1992) is known as the day that speculators broke the pound. They didn't actually ...
  3. What counts as "debts" and "income" when calculating my debt-to-income (DTI) ratio?

    It's important to know your debt-to-income ratio because it's the figure lenders use to measure your ability to repay the ...
  4. Who are Monsanto's main competitors?

    Learn about Monsanto Company's two main operating divisions and its main competitors within each sector, including The Mosaic ...
Trading Center