Make A Market

DEFINITION of 'Make A Market'

An action whereby a dealer stands by ready, willing and able to buy or sell a particular security at the quoted bid and ask price.

BREAKING DOWN 'Make A Market'

By being able to make a market allows the brokerage to fill customer orders out of the brokerage inventory, which is faster and easier than filling orders from other brokerages or investors.

RELATED TERMS
  1. Bid Wanted In Competition - BWIC

    A situation where an institutional investor submits its bond ...
  2. Purchase and Resale Agreements ...

    An arrangement between the Bank of Canada and dealers whereby ...
  3. Brokerage Account

    An arrangement between an investor and a licensed brokerage firm ...
  4. Firm Quote

    A price quote on a security, made by a dealer or market maker, ...
  5. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
  6. Left-Hand Side

    The bid side in a two-way price quote. A two-way price quote ...
Related Articles
  1. Investing Basics

    What's a Brokerage Account?

    A brokerage account is a contractual arrangement between an investor and a licensed securities broker or brokerage.
  2. Investing Basics

    What's a Dealer Market?

    In a dealer market, market participants buy and sell through dealers who are designated as market makers.
  3. Professionals

    Broker Vs. Dealer

    The term broker dealer actually refers to the two capacities in which a firm may act when executing a transaction. When a firm is acting as a broker, it is acting as the customer’s agent ...
  4. Professionals

    Transactions

    Riskless Principal Transactions If a brokerage firm receives a customer order to buy or sell a security and the firm does not have an inventory position in the security, the firm may still elect ...
  5. Term

    How Bid Price Affects Liquidity

    The bid price is the amount a buyer will pay for a security.
  6. Professionals

    MUNICIPAL BOND TRADING

    Municipal Bond Trading Municipal bonds trade over the counter in the secondary market much like OTC stocks. Municipal bond dealers provide quotes on the bonds that they deal in, to other broker ...
  7. Professionals

    Spread Calculations

    CFA Level 1 - Spread Calculations. Learn how to calculate the bid-ask spread in a foreign currency quote. Reveals the factors influencing the size of bid-ask spreads
  8. Term

    Negotiating the Bid

    A bid is an offer investors make to buy a security.
  9. Professionals

    C. Rule 200 Definitions and Order Marking

    Rule 200 updates the definition of who is determined to be long a security. As new derivatives and trading systems and strategies have been introduced, amendments to the short sale rules under ...
  10. Investing Basics

    Role Of A Market Maker

    A market maker is a firm or an individual that stands ready to buy and sell a particular security throughout the trading session to maintain liquidity and a fair and orderly market in that security. ...
RELATED FAQS
  1. What do the bid and ask prices represent on a stock quote?

    Learn what the bid and ask prices mean in a stock quote. Find out what represents supply and demand in the stock market and ... Read Answer >>
  2. What is the difference between a quote driven market and an order driven one?

    The difference between these two market systems lies in what is displayed in the market in terms of orders and bid and ask ... Read Answer >>
  3. How can an investor profit from the increase in popularity of discount brokerages?

    Find out how investors benefit when brokerages compete with each other, and how discount brokerages are changing the market ... Read Answer >>
  4. Why are most brokerage firms owned by banks?

    Learn about the differences between investing with a bank-owned brokerage firm or with an independent broker. Get real answers ... Read Answer >>
  5. Why are the bid prices of T-bills higher than the ask prices? Aren't bids supposed ...

    Yes, you are correct that the ask price of a security should typically be higher than the bid price. This is because people ... Read Answer >>
  6. How do I place an order to buy or sell shares?

    Read a brief overview of how to open a brokerage account, how to buy and sell stock, and the different kinds of trade orders ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center