Which of the following is/are true about specialists?
I. Investment banks generally cannot be specialists.
II. Specialists are used by the NASDAQ system.
III. Market and limit orders are transacted at specialist posts,but the specialist's own account orders are executed elsewhere.
IV. Specialists help maintain continuous trading.

Question

Quizplus · Accepted Answer

Specialists are market participants on exchanges like the New York Stock Exchange (NYSE) who have the dual role of providing liquidity by buying and selling stocks in which they specialize and ensuring fair and orderly markets. Investment banks generally do not serve as specialists, which makes statement I true. Specialists do not operate in the NASDAQ system, as NASDAQ uses a multiple market maker system rather than specialists, making statement II false. Statement III is incorrect because specialists do execute their own account orders at their posts, but under strict rules to prevent conflicts of interest. Statement IV is true as one of the primary roles of specialists is to ensure that trading remains continuous by managing buy and sell orders.

Which of the Following Is/are True About Specialists