Posted in Finance, Accounting and Economics Terms, Total Reads: 476
Definition: Specialist Firm
A firm that employees the specialists to represent companies listed on specific exchanges. Listed companies select employees from specialist firm to represent their company by holding an inventory of stocks.
A specialist is a market maker who facilitates trading of particular stocks. The specialist holds an inventory of stocks, post bid and ask prices. When a shortage of buyers or sellers develops, a specialist makes market in the security by buying or selling stocks from his inventory. In return, the specialist receives various informational and trade execution advantages. There is typically one specialist per stock who is prepared to step in to buy or sell the stocks to ensure a fair and systematic market for the stock. A specialist firm hires such specialists as employees.