What are the functions and limitations of a NYSE specialist in a listed stock? Compare and contrast the role of a NYSE specialist to the role of a NASDAQ market maker in a widely traded and sparsely traded stock

The NYSE specialist in a listed stock is required to disseminate simultaneous buy and sell quotations that are representative of the best bid and offer prices currently available for that stock, and the volume of stock that can be transacted at any given time. The NYSE specialist has the responsibility to supervise the two-sided auction among brokers on the exchange floor, where a substantial amount of the trading occurs. Also, the NYSE specialist is allowed to trade for his or her own account (though not ahead of customer orders), and is even required to provide liquidity to the market by using capital to participate in trades at certain times. But there is no competition among specialists for quotations on any stock; one specialist is effectively given a monopoly in each listed stock. Moreover, critics point out that specialist can avoid their obligations to maintain continuous two-sided quotations in times of extreme market volatility or major breaking news by obtaining permission from the NYSE to suspend trading, or delay the opening of trading, in a particular stock.
In the OTC market, by contrast, a dealer can choose to make a market (offer two-sided quotations) in as many or as few stocks as the dealer wishes. On the NYSE, the quote belongs exclusively to the specialist, and the specialist has the ultimate "insider's" view of the market; in NASDAQ, the quote is the basic medium of competition between dealers for order flow, and all dealers are formally equal in their access to market information. The assignment of a listed stock to a particular specialist is done by the exchange, while any qualified dealer can make a market in any NASDAQ stock with minimal requirement. This promotes competition in OTC stocks with high volumes that attract multiple market makers. But this also means that in low volume OTC stocks there may be no market maker willing to disseminate quotes, or there may be only a single market maker willing to fill orders only of limited size (e.g., 100 shares).
Another important difference between the NYSE and NASDAQ is the way the customer pays for trades. In NYSE trades, the customer usually pays a commission to a broker who transmits the customer's order to the NYSE floor. In some cases, these orders are matched against other customer orders in the "crowd" in front of the specialist's booth or in an electronic execution mechanism such as Superdot. In other cases, these orders are executed by the specialist acting as a dealer for its own account. By contrast, most OTC trades are executed with a dealer acting for its own account. In such trades, the customer typically does not pay a commission; instead, the customer pays a net price that includes the spread (between the bid and ask price) going to the OTC dealer. However, OTC trades are increasingly executed through electronic communication networks (ECNs), which represent a hybrid between the traditional OTC market and an exchange type of matching system.