THE FLOOR TRADER AND THE SPECIALIST 211
The majority of specialists act as dealers in much the same
way as the floor traders do, and speculate for small, quick
profits. In this buying and selling of securities with other
Exchange members for their own account, the specialists per-
form many of the functions of the “jobbers” in the London
Stock Exchange. Far from there being any reasonable ground
to object to this trading by the specialist, in reality the practice
constitutes one of his most useful functions in the Exchange
and renders the same general economic service that the more
scattered transactions of the floor trader do. For, if the spe-
cialist refused to engage in speculative dealings on his own
account, there often might not be sufficient orders for stocks,
either in his book or with other members of the crowd, to make
a close market for them. The Exchange insists, however, that
when the specialist does trade for himself, he must not pretend
to be executing orders as a broker.’ The specialist is, there-
fore, forbidden in any transaction to charge a commission as a
broker and at the same time make a profit as a dealer.
Precedence of Customers’ Orders.—Furthermore, the
specialist is compelled to give precedence to his customers’
orders for the purchase or sale of securities, over the orders
which originate with himself as a dealer, granting always that
both his and his customers’ orders are either market orders or
else limited at the same price. If, for example, a specialist has
a customer's order to buy 100 Reading at 735, and at the same
time wishes to purchase the same amount of the same stock at
the same price, he must execute the customer’s order before
buying his own stock. But if the specialist is willing to pay
75% or 75%; for the 100 Reading, he can, of course, do so
first. Similarly, if the customer's order is for the sale of 100
Union Pacific at 180, the specialist can sell 100 Union at 17974
or 17934 for himself, but cannot sell his own stock at 180 till
he has executed his customer’s order. With market orders the
customer’s order always has precedence.
"See Chapter III, p. 83, and Appendix VIIId.
