For a 20-year period beginning in 1986, the NYSE was regularly criticized for making less use

of electronic and computer technology than most of its competitors around the world, even

less than exchanges in emerging and developing countries and than exchanges just starting

business. The NYSE would argue that its specialist system required more "face-to-face"

contact than other non-specialist exchanges.

a. Why would the NYSE specialist system require more face-to-face contact than its

competitors?

b. Assume that face-to-face contact hurt investors more through increased trading

expenses and reduced trading efficiency than it helped them. That is, assume that the

argument that you prepared for part (a) is simply wrong. Why might the NYSE still

resist adopting improved electronic and computer technology?

c. How has the changes in recent years affected the role of the specialist?