Series 24: Designated Market Makers (DMMs)

Designated Market Makers (DMMs)

The most important participant on the exchange floor is the Designated Market Maker (DMM), also called the Specialist. An exchange like the NYSE assigns each traded security to a DMM. The DMM resides at a trading post, and all trades in a security will take place at the trading post where the security’s specialist is located. The DMM acts as auctioneer, controlling the auction process, and matching buy orders with sell orders. Both floor brokers and DMMs are aided by electronic equipment, such as handheld devices that relay quote information.

Quote information disseminated on the exchange consists of the highest bid and lowest offer price per stock and the quotation’s size limi