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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.
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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.
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Learn how the Nasdaq''s market makers enter orders and maintain a two-sided market.
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Find out what's happening in a given stock with this service showing Nasdaq market makers' best bid and ask prices.
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Discover how these two groups work together to keep the market functioning properly.
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