Specialists stumble

Economist.com | The New York Stock Exchange: Charges against its middlemen roil the Big Board

"LOTS of money can be made in the tiny gaps between the buying and selling prices of shares. But the “specialists” on the New York Stock Exchange (NYSE), who match buy and sell orders, walk a fine line between their duty to their customers and that to their employers. Too fine, it seems. This week federal prosecutors in America charged 15 specialists with making $19m for their firms from improper trading. At the same time the Securities and Exchange Commission (SEC) settled civil charges against the NYSE for poor oversight of its floor, where most trades are still done.

~snip some very interesting information--click the link to read the article~

This week's charges may hasten the exchange's switch away from the floor. “Electronic trading systems are much less scandal-prone,” says Benn Steil of the Council on Foreign Relations. The NYSE already plans to become more electronic—and, says Mr Steil, if John Thain, the chief executive, and Marshall Carter, just appointed as chairman, want to get serious about an initial public offering, the trading floor might just have to go altogether. Specialists would rue that day, but would have only themselves to blame."