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To: victor pan who wrote (20044)	8/2/1998 8:25:00 PM
From: chenys	Respond to of 45548

I am no expert, but let me just say that NYSE uses specialists, while NASD uses market makers to regulate prices. Two URLs posted below, while not necessarily up-to-date, are quite educational to me. I hope you will like them. 1. nyse.com 2.http://www.pathfinder.com/fortune/1996/961223/fst.html I am sure one can go to the NASD site and get more.

To: victor pan who wrote (20044)	8/2/1998 9:02:00 PM
From: chenys	Read Replies (1) \| Respond to of 45548

Just in case you get lost in the web. NYSE was playing a trick even on the address. Let me post the whole thing anyway. 3. How The NYSE Operates Specialists Chapter 3: How the NYSE Operates Brokers called "specialists" play a critical role because they serve as the contact point between brokers with buy and sell orders in the NYSE's two-way auction market. Each stock listed on the NYSE is allocated to a specialist, a broker who trades only in specific stocks at a designated location. All buying and selling of a stock occurs at that location, called a trading post. Buyers and sellers - represented by the floor brokers - meet openly at the trading post to find the best price for a security. The people who gather around the specialist's post are referred to as the trading crowd. Bids to buy and offers to sell are made by open outcry to provide interested parties with an opportunity to participate, enhancing the competitive determination of prices. When the highest bid meets the lowest offer, a trade is executed. To a large degree the specialist is responsible for maintaining the market's fairness, competitiveness and efficiency. Specifically, the specialist performs four vital functions. One of the specialist's jobs is to execute orders for floor brokers in their assigned stocks. A floor broker may get an order from a customer who only wants to buy a stock at a price lower than the current market price - or sell it at a price higher than the current market price. In such cases, the broker may ask the specialist to hold the order and execute it if and when the price of the stock reaches the level specified by the customer. In this role the specialist acts as an agent for the broker. Specialist (left) conferring with floor broker about an order in a stock handled by the specialist. In a sense, specialists act as auctioneers for their assigned stocks. At the start of each trading day, the specialists establish a fair market price for each of their stocks. The specialists base that price on the supply and demand for the stock. Then, during the day, the specialists quote the current bids and offers in their stocks to other brokers. Specialists are also called upon to maintain "orderly markets" in their assigned stocks. That is, they ensure that trading in the stocks moves smoothly throughout the day, with minimal fluctuation in price. Finally, if buy orders temporarily outpace sell orders in a specialist's assigned stocks - or if sell orders outpace buy orders - the specialist is required to use their firm's own capital to minimize the imbalance. This is done by buying or selling against the trend of the market, until a price is reached at which public supply and demand are once again in balance. In this role the specialist acts as a principal or dealer. Specialists participate in only about 10 percent of all shares traded. The rest of the time, public order meets public order without specialist participation.