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Answer:
Dear
BuyandHolder,
Good
question. A number of BuyandHolders have asked about
the system but not about the players!
The
specialist system distinguishes the New York Stock
Exchanges from the other exchanges. Under its rules,
specialists manage trading in individual stocks and
also act as the buyer and seller "of last resort"
for their stocks. They must do this, even if it costs
them money. Their purpose is to provide liquidity.
I
explained the system in greater detail in a previous
column. You might want to click HERE
to read the full study.
Dissenters
Not
everyone thinks it's a good system. Jack Bogle, the
retired founder of Vanguard, the large mutual fund
company, wrote an op ed column in the Wall Street
Journal last September in which he pointed out
that the specialists firms are very profitable and
if they were indeed the buyers and sellers of last
resort, they would most likely be losing money.
You
may or may not agree with Mr. Bogle, but it's an interesting
thought and he's not alone in his position. On the
other hand, many experts and brokers maintain that
the system works well.
The
Group of Seven
However,
you asked who the specialists are, not if the system
is effective. The following are the seven specialists
connected to the New York Stock Exchange. The number
of common stocks each is responsible for is approximate.
| Specialist
Firm |
Common
Stocks |
| LaBranche
& Co. |
575 |
| Spear
Leeds & Kellogg |
570 |
| Fleet |
430 |
| Van
Der Moolen |
375 |
| Bear
Wagner |
340 |
| Performance |
145 |
| SIG |
125 |
These seven firms employ 443 individual specialists
who specialize in 2,800+ stocks. Most of these specialists
manage five to ten stocks. However, when a specialist
manages one of the most active stocks on the Exchange,
he normally specializes in that particular stock and
perhaps a less active one.
Note:
Specialists are independent companies, set up as corporate
partnerships.
For
More Information
Go
to www.nyse.com
and then to the Glossary section and click on "Specialists."
You'll find the above list of seven with active links
to each firm's website. Then go to "Press Room" and
read the releases covering recent action surrounding
the specialists. I think you'll find both interesting
reading.
BUYandHOLD
does not recommend any securities. The companies mentioned
above are being used for informational and illustrative
purposes only and should not be regarded as an offer
to sell or as a solicitation of an offer to buy.
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