Specialist Accounts

Discussion in 'Trading' started by cmt, Nov 22, 2005.

  1. cmt


    I read somewhere that the specialist can only trade his own account under certain conditions. I was wondering if this is accurate. If so, what are the conditions? Do they actually adhere to the guidelines or do they trade their account whenever it suits them? Thanks.
  2. Generally, specialists have to accomodate customer orders before their own orders. They can't trigger "stop" orders when trading for their own account. Depending on what you want to believe, specialists can get around those restrictions by having discretionary accounts. Hypothetically speaking, a specialist could create a short-sale without a downtick by selling "long" stock from a discretionary account and buying it back at a lower price and splitting the profit with that customer. A specialist could trigger "stops" by taking a position on behalf of a discretionary account before a "stop price" is touched and not be accused of "front running".