Trading Securities - The Role Of The Specialist / DMM

The specialist now known as the designated market maker is an independent exchange member who has been assigned a stock or group of stocks for which they are the designated market maker (DMM). They are responsible for:



  • Maintaining a fair and orderly market for the securities
  • Buying for their own account in the absence of public buy orders
  • Selling from their own account in the absence of public sell orders
  • Acting as an agent by executing public orders left with them

A large amount of capital is required in order to fulfill the requirements of a specialist / DMM. As a result most specialists/ DMMs are employees of specialist firms. While the specialist is not required to participate in every transaction, every transaction for that security that is executed on the exchange must take place in front of the DMM. The DMM may act as either an agent or as a principal if they play a role in the transaction.



The Specialist / DMM Acting As A Principal


Related Articles
  1. Professionals

    The Role Of The Specialist / Designated Market Maker (DMM)

    The specialist is an independent exchange member who has been assigned a stock or group of stocks for which they are the designated market maker (DMM). They are responsible for: Maintaining a ...
  2. Professionals

    The Specialist / DMM Acting As An Agent

    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 ...
  3. Professionals

    B. The Exchanges

    The most recognized stock exchange in the world is the New York Stock Exchange or the NYSE. There are, however, many exchanges throughout the United States that all operate in a similar manner. ...
  4. Professionals

    The Specialist / DMM Acting As A Principal

    In the absence of public orders the specialist / DMM is required to provide liquidity and price improvement for the stocks in which they specialize. Specialists/ DMMs are required to trade against ...
  5. Professionals

    The Specialist / DMM Acting As A Principal

    In the absence of public orders the specialist / DMM is required to provide liquidity and price improvement for the stocks in which they specialize. Specialists/ DMMs are required to trade against ...
  6. Professionals

    THE DMM ACTING AS A PRINCIPAL

    The DMM Acting as a Principal In the absence of public orders the DMM is required to provide liquidity and price improvement for the stocks in which they are the designated market maker. DMMs ...
  7. Professionals

    The Specialist / DMM Acting As An Agent

    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 ...
  8. Professionals

    THE DMM ACTING AS AN AGENT

    The Acting As an Agent The DMM is also required to execute orders that have been left with them. Orders that have been left with the specialist for execution are said to be “left, or dropped, ...
  9. Professionals

    STOPPING STOCK

    Stopping Stock A DMM, as a courtesy to a public customer, may guarantee an execution price while trying to find an improved or better price for the public customer. This is known as “stopping ...
  10. Professionals

    Stopping Stock

    A specialist, as a courtesy to a public customer, may guarantee an execution price while trying to find an improved or better price for the public customer. This is known as “stopping stock” ...
RELATED TERMS
  1. Designated Market Maker - DMM

    A market maker that is obligated to maintain fair and orderly ...
  2. Specialist

    A member of an exchange who acts as the market maker to facilitate ...
  3. Specialist Unit

    A group of firms or individuals that act as a market maker for ...
  4. Write Out

    A dual trade transaction enacted by a specialist in an individual ...
  5. Specialist Short Sale Ratio

    A ratio used to determine the sentiment of specialists on the ...
  6. Specialist Firm

    The firms that hire the specialists to represent companies listed ...
RELATED FAQS
  1. Who employs the specialists at New York Stock Exchange (NYSE)? Do they work for themselves, ...

    Before we address this question, let's review what specialists do. Specialists are people on the trading floor of an exchange, ... Read Answer >>
  2. What's the difference between a Nasdaq market maker and a NYSE specialist?

    What's the main difference between a specialist and a market maker? Not much. Both the New York Stock Exchange (NYSE) specialist ... Read Answer >>
  3. A _______ is a person on the trading floor of certain exchanges who holds an inventory ...

    The correct answer is d. A good example of an exchange using the specialist system is the NYSE. Each stock listed on the ... Read Answer >>
  4. When a floor broker asks a specialist, “How’s PDQ?” ...

    The correct answer is d. When the specialist gave the floor broker the quote of “59.20 to 35; 6 by 11,” the quote meant that ... Read Answer >>
  5. When a floor broker asks a specialist, “How’s PDQ?” ...

    The correct answer is d) When the specialist gave the floor broker the quote of “59.20 to 35; 6 by 11,”  the quote meant ... Read Answer >>
  6. How do financial advisors execute trades?

    Understand how financial advisors normally execute an investor's trades. Learn about the different type of markets and exchanges ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center