What is 'Saitori'

Saitori, also known as saitori member, is the term for employees who buy and sell securities on behalf of stock brokers on one of several Japanese stock exchanges. Saitoris function as security trading intermediaries among the regular members of a Japanese stock exchange. Each individual saitori generally concentrates on a particular grouping of listed securities. Securities that are traded may include equities, options and futures. On the stock exchange in Osaka, Japan, the term nakadachi is used instead of saitori.

BREAKING DOWN 'Saitori'

A Saitori’s primary job function is to facilitate the trading of securities by matching buy and sell orders. Saitoris are also responsible for making the market as orderly and efficient as possible. The majority of saitoris in Japan are employed by the Tokyo Stock Exchange (TSE), which is the nation’s largest securities exchange. A saitori has a very similar function as a specialist on the New York Stock Exchange (NYSE). Both a saitori and a specialist match buyers with sellers on behalf of brokers, both act as market makers and both must ensure that transactions are handled smoothly and accurately.

One of the biggest differences between a saitori in Japan and a specialist in New York is that saitoris have fewer constraints regarding who they may trade for. For specialists in the U.S., it is illegal to trade for their own accounts or to arrange trades for the public in general. Specialists are only allowed to trade for members of the NYSE. Saitoris, on the other hand, generally do not face the same degree of restriction in this regard.

Specific Responsibilities of a Saitori

As the principal agent in each buy-and-sell transaction, a satori must wear multiple hats. Saitoris are probably best known for placing orders in accordance with their clients’ requests. It is also the responsibility of saitoris to ensure their clients receive the lowest price available and that all transactions are accurately handled as quickly as possible. In effect, saitoris play a role in driving market action. Each day the exchanges are open, saitoris need to efficiently convey the prices of the securities they cover. Every morning, they establish the opening bid prices of the securities in their inventory, based mostly on the level of supply and demand they’re encountering.

As much as it is essential for saitoris to successfully increase market action, it is also their responsibility to be an effective pacifier when markets panic. In the event of a market shock that induces a flurry of selling, saitoris must buy and sell from their own inventory of securities to help calm the market and, by extension, help settle investors’ nerves.

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