Specialist Unit

AAA

DEFINITION of 'Specialist Unit'

A group of firms or individuals that act as a market maker for one or many stocks trading on an exchange. A specialist unit maintains a stable market in a given security by acting as both a principal and agent for brokers. As a principal, a specialist unit will hold its own inventory of stock, in order to facilitate liquidity for a given trade.

INVESTOPEDIA EXPLAINS 'Specialist Unit'

Specialist units are also responsible for posting relatively narrow bid-ask spreads to maintain liquidity, managing limit orders and large block orders. Additionally, a specialist unit will act as a form of balance in the market by taking the opposing side of bullish or bearish sentiment for a given stock by trading out of its own inventory.

RELATED TERMS
  1. Specialist Firm

    The firms that hire the specialists to represent companies listed ...
  2. Specialist

    A member of an exchange who acts as the market maker to facilitate ...
  3. Broker Booth Support System - BBSS

    An electronic system used by the New York Stock Exchange to send ...
  4. Member Firm

    A broker-dealer in which at least one of the principal officers ...
  5. Market Maker

    A broker-dealer firm that accepts the risk of holding a certain ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value ...
Related Articles
  1. Brokers

    Evaluating Your Stock Broker

    Make sure you're getting the best service by staying informed and involved.
  2. Investing Basics

    The Basics Of The Bid-Ask Spread

    The bid-ask spread is essentially a negotiation in progress. To be successful, traders must be willing to take a stand and walk away in the bid-ask process through limit orders.
  3. Investing Basics

    Understanding Order Execution

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

    How Brokers Can Avoid A Market-Maker's Tricks

    Ensure that you and your clients are getting the best deal by avoiding these three pitfalls.
  5. Mutual Funds & ETFs

    Which ETF is the Best Bet: VTI or IWV?

    A look at two quality ETFs that offer diversification, low expense ratios, and exposure to the total market.
  6. Economics

    An Introduction to Government Loans

    Government loans further policymakers' efforts to create positive social outcomes by offering timely access to capital for qualified candidates.
  7. Markets

    Capital Markets

    Capital Markets are financial markets where organizations that need money for productive long-term purposes.
  8. Bonds & Fixed Income

    Spotting A Market Bottom

    Recognizing a market bottom can lead to huge opportunities for an investor. We go over how you can spot the bottom so that you can reap the rewards.
  9. Economics

    Introduction To Asian Financial Markets

    We look at the history of Asia's financial development and how investors can get involved in these growing markets.
  10. Active Trading

    Get Positive Earnings In The Negative-Sum Market

    Gain an advantage in the markets by understanding how to win in a negative-sum game.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center