Market Maker
Definition of 'Market Maker'A broker-dealer firm that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security. Each market maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares. Once an order is received, the market maker immediately sells from its own inventory or seeks an offsetting order. This process takes place in mere seconds. |
|
Investopedia explains 'Market Maker'The Nasdaq is the prime example of an operation of market makers. There are more than 500 member firms that act as Nasdaq market makers, keeping the financial markets running efficiently because they are willing to quote both bid and offer prices for an asset. |
|
Related Definitions
Articles Of Interest
-
A Look At Primary And Secondary Markets
Knowing how the primary and secondary markets work is key to understanding how stocks trade. -
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. ... -
Understanding Order Execution
Find out the various ways in which a broker can fill an order, which can affect costs. -
The Roles Of Traders And Investors In The Marketplace
Discover how these two groups work together to keep the market functioning properly. -
Adding Leverage To Your Forex Trading
The use of margin to trade in the foreign exchange market can magnify profit opportunities. -
Know Your Counterparty When Day Trading
This can provide insight into how the market is likely to act based on your presence, orders and transactions. -
The Foreign Exchange Interbank Market
Can your forex broker offer you the most competitive pricing? Learn how the market's biggest players affect you. -
How Brokers Can Avoid A Market-Maker's Tricks
Ensure that you and your clients are getting the best deal by avoiding these three pitfalls. -
Evaluating Your Stock Broker
Make sure you're getting the best service by staying informed and involved. -
Conversion Arbitrage
This stock/options combination helps traders take advantage of market mispricing. Find out how.
Free Annual Reports