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    Alley-side Pickup: 10am - 7pm

    3038 Hennepin Ave Minneapolis, MN
    612-822-4611

Open Daily: 10am - 10pm | Alley-side Pickup: 10am - 7pm
3038 Hennepin Ave Minneapolis, MN
612-822-4611
International Finance Discussion Papers: An Empirical Analysis of Specialist Trading Behavior at the New York Stock Exchange

International Finance Discussion Papers: An Empirical Analysis of Specialist Trading Behavior at the New York Stock Exchange

Benediktsdottir, Sigridur
United States Federal Reserve Board

Paperback

General Political Science

ISBN10: 1288727720
ISBN13: 9781288727728
Publisher: Bibliogov
Published: Feb 8 2013
Pages: 30
Weight: 0.16
Height: 0.06 Width: 7.44 Depth: 9.69
Language: English
I establish stylized empirical facts about the trading behavior of New York Stock Exchange specialists. Specifically, I look at the effect of future price movements, the specialist's explicit role, and the specialist's inventory levels on specialist trading behavior. The motivation for this empirical study is to infer whether the specialist behaves like an active investor who has an information advantage which he obtains while acting as a broker for other traders. If this were the case, one would expect that the specialist would engage in a profit maximizing strategy, buying low and selling high, which is opposite to the prediction of the traditional inventory model. I find that specialists behave like active investors who seek to buy stocks when prices are low and to sell when prices are high. I also find that when specialists are not performing their trading obligations of being on the opposite side of the market they are in almost 85 percent of their trades, buying low and selling high. The findings of this paper indicate that the NYSE specialist is best represented in theoretical models as a constrained profit maximizing, informed investor rather than as a zero profit trader.

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