Specialists

In the hybrid market, the Specialist continues to play a key role in both the active and the less active instruments. Specialists will open and close securities, maintain their quoting obligations, manage auctions, add liquidity to the AEMI book, and offer price improvement to the electronic environment and the auction market.

Quoting Methods
Specialists may submit quotes in one of three ways: (i) Stream in externally generated quotes from a proprietary system (“streaming quotes”). When streaming quotes, a Specialist may add liquidity at up to five price points on either side of the book; (ii) Enter quotes individually, using the AEMI front end supplied by Amex (“solo-quoting”); (iii) Generate quotes automatically according to parameters set by the Specialist (“auto-quoting”) using the AEMI front end. These parameters allow the Specialist to set the size of this auto-quote bid and offer, to peg his bid (offer) to the National Best Bid (Offer), input an offset value, and input a quote spread where his contra-side offer (bid) will be generated. Therefore, the Specialist’s quote is automatically moved according to the pre-set parameters as the underlying benchmark moves.

Continuity of Quotation
Specialists who stream in quotes will provide continuity of quotation automatically through the constant stream. For Specialists using the AEMI front end provided by Amex, continuity of quote is provided through the generation of an “emergency quote”. If a Specialist’s quote is either exhausted or decremented in a given security to below a size set by the Specialist, and no price change in the market has automatically generated a new quote, then AEMI will generate an emergency quote.

Example
A Specialist has set his bid to match the National Best Bid in 2000 shares. Each time the NBB moves, a fresh bid for 2000 shares is automatically generated by AEMI for the Specialist. The Specialist has set his emergency quote parameters to generate 1000 shares two ticks away from his last quote. His emergency quote size, should his bid or offer be depleted below this amount, has been set to 300 shares. Assume that the Specialist’s quote is 2000 shares bid at $8.60, matching the NBB. An incoming sell order for 1800 shares depletes his quote, leaving 200 shares on the bid side. Based on his parameters, the quote of 200 shares is replaced by an emergency quote for 1000 shares at $8.58. Upon the next update of the NBB a new auto-quote will be generated for 2000 shares equal to the price of the NBB less any offset input by the Specialist.

Market Makers

On-floor Market Makers in exchange Traded funds and other derivatively priced products will continue to add liquidity by participating both in the electronic environment and in the auction market. Similar to the Specialists, Market Makers will: (i) Stream in externally generated quotes from a proprietary system. Similar to the Specialist, Market Makers may also provide liquidity at up to five price points on either side of the book; (ii) Solo-quote by entering quotes individually using the AEMI front end; (iii) Auto-quote using parameters set by each Market Maker using the AEMI front end. In addition to the NBB (NBO), Market Makers may also peg their bid (offer) to the Intra-Day Optimized Portfolio Value (IOPV) or the Amex Published Bid (Offer). As with Specialists, the contra-side of the Market Maker quote is generated based upon the quote spread input by each Market Maker. Market Makers may also participate in auctions and are required to be physically present in the trading crowd and electronically quoting at the time of the auction in order to do so.

FAQs

Can a Specialist or Market Maker submit a one-sided quote?
No, all quotes submitted to AEMI must be submitted with a bid and an offer (price and size). This applies to all quoting methods.

Is emergency quote available while the Specialist is streaming his quote from a proprietary system?
No, emergency quoting is only available while the Specialist is solo or auto-quoting.