Write Out

Write out is the process describing a dual-trade transaction involving a specialist and a floor trader for an individual stock issue. The first trade in a write out will be between the specialist and a floor trader, using the specialist's own inventory of stock. The stock is sold to the trader, who then executes the second part of the trade by transacting the same number of shares with an end client.

Specialists have daily inventories of stock to use as they see fit to maintain an orderly market in the stocks in which they make markets. By stepping in to purchase or sell shares as needed, they can help facilitate a smooth and orderly market, even during volatile trading days. The advent of electronic trading platforms has limited the need for specialists and write outs, and while it is possible that these human beings will disappear altogether on trading floors, it hasn't happened quite yet as of the time of this writing (2018).

The term "write out" harkens back to the days of paper transactions when participants on a trading floor wrote down orders with paper and pen. A floor trader seeking a particular stock would approach a specialist at his designated post on the trading floor. When they agreed to quantity and price of a stock, the specialist wrote out the order for the trader, who then, with paper in hand, transacted the second leg of the dual-trade with his client. A write out today is by electronic means, but there may be times when old-fashioned paper and pen is needed, as during a trading platform breakdown or power outage. Though rare, these incidents have occurred in the past.