exchange who own their own seats and handle work for commission brokers when those brokers have too many orders to handle. The specialist is central to the trading process. Specialists maintain a market in one or more listed securities. All trading in a given stock takes place at one location on the floor of the exchange called the specialists post. At the specialists post is a computer monitor, called the Display Book, that presents all the current offers from interested traders to buy or sell shares at various prices as well as the number of shares these quotes are good for. The specialist manages the trading in the stock. The market-making responsibility for each stock is assigned by the NYSE to one specialist firm. There is only one specialist per stock, but most firms will have responsibility for trading in several stocks. The specialist firm also may act as a dealer in the stock, trading for its own account. We will examine the role of the specialist in more detail shortly.     Types of Orders   Market Orders Market orders are simply buy or sell orders that are to be executed im- mediately at current market prices. For example, an investor might call his broker and ask for the market price of Exxon. The retail broker will wire this request to the commission broker on the floor of the exchange, who will approach the specialists post and ask the specialist for best current quotes. Finding that the current quotes are $68 per share bid and $68.15 asked, the investor might direct the broker to buy 100 shares "at market," meaning that he is willing to pay $68.15 per share for an immediate transaction. Similarly, an order to "sell at market" will result in stock sales at $68 per share. When a trade is executed, the specialists clerk will fill out an order card that reports the time, price, and quantity of shares traded, and the transaction is reported on the exchanges ticker tape. There are two potential complications to this simple scenario, however. First, as noted earlier, the posted quotes of $68 and $68.15 actually represent commitments to trade up to a specified number of shares. If the market order is for more than this number of shares, the order may be filled at multiple prices. For example, if the asked price is good for orders of up to 600 shares, and the investor wishes to purchase 1,000 shares, it may be necessary to pay a slightly higher price for the last 400 shares than the quoted asked price. The second complication arises from the possibility of trading "inside the quoted spread." If the broker who has received a market buy order for Exxon meets another bro- ker who has received a market sell order for Exxon, they can agree to trade with each other at a price of $68.10 per share. By meeting inside the quoted spread, both the buyer and the seller obtain "price improvement," that is, transaction prices better