Please tell me, how can a institution become a specialist on NYSE / a market maker on NASDAQ?

thanh_nguyen: Please tell me, how can a institution become a specialist on NYSE / a market maker on NASDAQ?
I’m looking for more information about “market maker” on securities market. Like condition to be a specialist on NYSE and market maker on NASDAG. The market maker model, how can a market maker model run?
Thanks so much.

Answers and Views:

Answer by Ron Berue
They are licensed by the SEC. Market makers and speecialists are subject to the same scrutiny and testing as stockbrokers, because the ARE stockbrokers.

I don’t know if the corporations, themselves, have different rules and regs, but for the great majority of the folks working under the corporate license, providing financial advice about buying, selling and holding are subject to the same Series 7 exam as any other person desiring to sit for the exam.

Other than passing the Series 7 exam, I never looked into the actual requirements for becoming a market maker or specialist.

Thanks for asking your Q! I enjoyed answering it!

VTY,
Ron Berue
Yes, that is my real last name!

Answer by A nobody
There is a big difference between a market maker and specialist. The mode of operations is different as well as the functions they perform

To be either a market maker and/or a specialist you first need to be a member of the exchange. No one is allowed on the floor of the exchange to execute orders unless they have membership. Specialists do have employees who do work on the floor.

To be specialist on the floor of the exchange you will have to be either a broker/dealer or an existing financial institution. To be a B/D you of course will have to be registered with the SEC. Once registered you will have to buy a membership to the exchange. If approved, then apply to be a specialist. You have to verify with the various exchanges to see if there is any availabilities for books.

A market maker is a registered broker dealer who must have membership in the exchange
Once a member they must apply to that exchange for market making functions.

Both functions do require a substantial amount of capital and sufficient capital be in compliance at all times with the rules governing net capital

To describe how the market making models runs can not be done in this type of media and such information is usually available on a fee based program.

Note the response given by Ron Berue is not correct

Answer by Rod O
Specialists have to buy their market from the trading board, NYSE for example. In addition they agree to keep the market in the stock liquid. That means there are times the specialist has to step in and take a loss if the stock they are trading is in difficulty or the market is having problems. Generally they take a little bit of every trade in the stock, up or down, and so are assured profit in the long run…