The New York Stock Exchange plans finally to do away with the specialist model, replacing it with a system of designated market makers (DMMs) that will open the way for new entrants into what was once an exclusive and powerful club.
DMMs will have obligations to quote prices, given incentives to do so by trading rewards and by the potential exclusion from future securities allocations if quoting thresholds are not met. New applicants as well as current specialists can become DMMs and will benefit from preferential trading opportunities as the primary liquidity providers.
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