Business and Personal Finance Dictionary

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• SPECIALIST
  
  A specialist or specialist unit maintains a fair and orderly market in a specific security or securities on the floor of an exchange. Typically, that means acting both as agent and principal. As agent, the specialist handles transactions for floor brokers who want to buy or sell one of the securities, collecting a percentage of the commission the client pays for the transaction. As principal, the specialist buys for his or her own account to help maintain a stable market in a security. For example, if the spread, or difference, between the bid and ask (the highest price offered by a buyer and the lowest price asked by a seller) gets too wide, and trading in the security hits a lull, the specialist might buy, sell, or sell short shares to narrow the spread and stimulate trading.
  
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