Specialists

[2pac Shakur]

Couldn't a computer program do a more efficient job?
Plus, seems like with open code, it would be less prone to scandal.

[Colymbosathon ecplecticos]

The specialist trades his own account. Sometimes he loses money. (On average, of course, he makes money.) If there were a program with a known algorithm in his place, I suspect that it would lose much more often.

[2pac Shakur]

Originally Posted by Colymbosathon ecplecticos

The specialist trades his own account. Sometimes he loses money. (On average, of course, he makes money.) If there were a program with a known algorithm in his place, I suspect that it would lose much more often.

But the specialist's primary function (ostensibly) is to add liquidity, right?
Making money/losing money is only supposedly a minor factor I thought.
Members could pay for any losses. Money could be recouped from what specialists used to get paid. Plus, more volume should result from no more/reduced bid/ask spread, right?

This is all new to me.

Thanks.

[FSAwannabe]

how do you propose the specialist aka the computer would add liquidity if there was no trading for its own account? I think the idea of the specialist is to clear outstanding bids and offersl when there is no other demand (or offers) by trading for his own account and he does this because he anticipates and hopes he will make money along the way