Lehman Brothers (LEH) is set to buy Van der Moolen's (VDM) U.S. specialist unit following the market-maker's recent departure from the NYSE after posting steep losses, the Financial Times reports. Van der Moolen had planned to shutter its specialist business as electronic trading is increasingly making the specialist's role obsolete. The Financial Times says it's unclear why Lehman might want the unit, which lost $16.5 million over the first three quarters, although sources say the unit could still have value "if acquired at the right price." Bernstein analyst Brad Hintz, former Lehman CFO, said the prospect surprised him, especially in the light of attempts by Lehman and other investment banks to internalize order flow. "It's hard for me to believe that a specialist firm has any value in today's environment," Hintz said. But the FT says the NYSE is thought to be in talks with several firms about becoming specialists, to add to the exchange's current five -- units of Bank of America (BAC), Goldman Sachs (GS) and Bear Stearns (BSC), along with LaBranche (LAB) and Kellogg -- and exchange insiders say the specialist will survive despite the prevalence of electronic trading. Sources noted possible rule changes on the NYSE floor could bolster specialists' profitability. Besides matching buyers with sellers, specialists also buy and sell shares with their own money in order to maintain an orderly market.
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