When is stopping stock permitted by a specialist?

Stopping stock refers to a practice where a specialist on an exchange agrees to hold or "stop" a certain number of shares at a specific price for a customer order. This is typically done to ensure that the order can be executed smoothly and at an agreed-upon price.

When the specialist is executing a public order, they are acting in the best interest of the market and ensuring that orders are filled appropriately at the best available prices. This action helps maintain liquidity and price stability, which are essential for the efficient functioning of the market.

In contrast, the other scenarios presented would not justifiably allow for stopping stock. Fulfilling a personal order or engaging in private transactions does not align with the broader market-making responsibilities of a specialist, which includes serving public orders. Moreover, stopping stock merely for market interest, without a specific public order to uphold, does not reflect the established role of the specialist in supporting market efficiency and integrity. Therefore, stopping stock is primarily permitted when a public order is being executed.