New-York tribune., 1914-07-06
THE SPECIALISTS
ON The EXCHANGE
Middlemen Who Help to
Make Good Markets for
Stock Traders.

Stock Traders.
On the Stock Exchange If one mem
ber overheard another saying anything
about giving the devil his due ms
first thought would be, nine times out
of ten. that some one was proposing
to apologize TO specialist. And he
would probably be right. There IS no
one so much blamed as the specialist,
no one so little praised. lie stands al
his literally at his post-on the
firing line all day long. lie makes
purchases and sales where others
would have missed the market. lie
saves the lives, fguratively, of many
anxious speculators who unknowingly /
depend upon him. He cuts off the
profits of some timorous souls, II is
true. but at their own bidding. AND .
all he gets is 50 hundred shares or,
on rare occasions and for additional
services, SO 13. That and the burden
of 80 per cent of the blame, deserved .
or undcserved, Of a transaction that
goes wrong.
The specialist was born out Of the
inability OF the average commission +
house broker TO be in n dozen places
at once lie owes his occupation to .
other things, but that is the chief. He .
5ticks to ono stock or group Of stocks
and he buys and sells for other .
brokers just that stock or stocks and
nothing else. Other brokers give him
the orders that they haven't the time
or the equal ability to execute them
selves. The orders on his books and
his constant attendance at the particu-
lar place on the floor Of the exchange
where his spcclaltics arc dealt in give
him the knowledge par excellence Of
what the market in those certain stocks
is.
There is no constant number of spc-
ciaiists on tho Stock Exchange. The .
total runs into many scores. Each OF
the sixteen posts on the floor of the
exchange has its group Of them. tho
number varying largely with the num-
Der Of active stocks traded in at that
centre At No. post there arc eleven .
specialists, dealing exclusively in steel .
There are seven in Union Paclhc and
seven, too, in Erie at Post No. 9. Head- .
ing, at Post II, has six specialists,
whereas seventeen stocks at another
post are handled by only two brokers,
aud all the seven Telephone and Tcle- /
graph stocks by ono. The more active .
a stock is the greater the number OF .
specialists there will be.
When a customer in a commission .
house gives his broker an order to sell .
a stock at, say. 81 y. the market thcH .
being 9l-9ll4, the chances are that the .
broker turns the order over TO
specialist He can't afford 10 wait
around the particular post where that .
stock is dealt in until somebody gets
around to bidding 81 T. but the special .
st can. That is his business. Other
customers in other Offices may likewise
have given orders to sell above the
market or 20 buy below 1t. These, too,
20 TO the usually as mat
ter Of course, and so Immediately, but
sometimes only after the commission
house broker has waited too long to
buy or sell something else at some
other place. In that event the blame
for an unsatisfactory execution often
shifts over onto the shoulders Of the
specialist. When he knows about q
he can defend himself; but he doesn't
often know about it.
The ordinary procedure for the
specialist when he executes an order
is TO give up" the name OF his prin-
cipal. the commission house broker. 90
the man he trades with. That done.
his s. is earned. and he has no more
to do with the transaction. Once i'm
while the principal wishes to remain
unknown. and 50 the specialist "clcars
the trade" receives or delivers the
stock. as the case may be as though
lie were himself the principal. For the
additional service he gets 81 Is. MAX
ing SO Is in al three and shilling
IN the veTnaCular.
Some trading the specialist actually
does on his own account but not
AGAINST his customers orders. even
though that practice can be defended.
l. is forbidden on the Stock Exchange
and. without the customers consent. j.
Illegal besides. Straight trading for
his own account is not discouraged in
the specialist. because. as the Hughes
commission remarked in its famous re-
port. "the practice Of specialists in
buying and selling for their own ac-
count often serves TO create market
where otherwise one would not exist"
A curious illustration Of the kind
of work that sometimes falls TO the lot
Of the specialist is afforded by some
thing that happened comparatively re-
Gently. The stock concerned may be
called A Q. It's closing price on Mon
day was 109ii. A broker sent over
an order TO the specialist before the
opening Of the market on Tuesday TO
buy 100 shares at l02i2. About II
O'Clock A Q was quoted on the ticker
a. 1O1i ]. bid, 103 offered. "I1ow about
my stock? ?" asked the broker who had
put in the buying order. "Thcrc is
no real market" answered the special
ist. "You viii get it lower" The
broker ;hen ordered an additional 100
shares TO be bought at 1902. Some time
aftcrward A q came over the ticker
C0O1O1l2. and in a few minutes the
specialist reported that he had filled
beth buying orders the first one o.
l02iz and the later ono of i02 at the
market price. l0l y. As il happened
the specialist had had some stop Or
dcrs on his books at l0l -, but he
could not execute them until trans
action had taken place at that figure.
The transaction n that price put into
operation the stop orders that were
also at 101'z, and enabled the special
lst TO IN the two buying orders. both
placed AZ higher figure but exc
cuted. through tho lucky circumstance
Of there being several stop orders on
the specialists books at 10l v, at the
lower figure.
What Happened to Business?