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
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TradingThis can provide insight into how the market is likely to act based on your presence, orders and transactions.
Personal FinanceUnderstand the scope of work of an e-marketing specialist, and learn about the career's required education, skills and average earnings.
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InsightsLearn some of the important differences in the way these exchanges operate and the securities that trade on them.
InvestingA market order is the most common order used to purchase a financial security.
InvestingA market maker is a firm or an individual that stands ready to buy and sell a particular security throughout the trading session to maintain liquidity and a fair and orderly market in that security. ...