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Unlike old-fashioned specialists on the New York Stock Exchange, who are obligated to stay in the market whether it is rising or falling, high-frequency traders
by brown9-2 17y ago
Unlike old-fashioned specialists on the New York Stock Exchange, who are obligated to stay in the market whether it is rising or falling, high-frequency traders can walk away at any time.
Can anyone explain what the first half of this sentence means?
- deleted 17y ago[deleted]
- deleted 17y ago[deleted]
- njl 17y agoI am not a Wall Street expert, by any means, but... The NYSE has guys (mostly guys) who stand around on the floor and act as market makers for various stocks. They call 'em specialist. They stand around and run the auctions for shares, match up bids and so on. Basically, they make sure that if you want to sell a stock, there is somebody buying, and vice-versa. This is their business, and they can't just throw up their hands and wander away, ruining the market in some given stock. The high-frequency traders provide a similar function in electronic exchanges. However, they all threw up their hands and walked away, exacerbating an already bad situation as the liquidity left the market.
- losvedir 17y agoIn addition, I believe they will actually buy shares from you or sell shares to you, in certain circumstances, if there's no one else willing to. That's the key difference the article was referring to.
- ashika 17y agopretty close. They're talking about designated "market makers" (of which specialists are a subset) who get into a contractual obligation with an exchange to be in certain markets for specified percentages of the trading day. They've been part of the exchange landscape for a long time, and they've been largely displaced by HFT firms. To say that this changing landscape is somehow to blame for the flash crash is dubious, at best, however.
- ars 17y agoThey are also called http://en.wikipedia.org/wiki/Market_makers http://en.wikipedia.org/wiki/Market_makers