Specialist Unit

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.

BREAKING DOWN '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.

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RELATED FAQS
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    Before we address this question, let's review what specialists do. Specialists are people on the trading floor of an exchange, ... Read Answer >>
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    What's the main difference between a specialist and a market maker? Not much. Both the New York Stock Exchange (NYSE) specialist ... Read Answer >>
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    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 >>
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