Third Market Maker

DEFINITION of 'Third Market Maker'

A third-party securities dealer that is ready and willing to buy or sell stocks listed on exchanges at publicly quoted prices. Third market makers add liquidity to financial markets by facilitating buy and sell orders even if there isn't a buyer or seller immediately available for the other side of the transaction. Third market makers make a profit from their roles as intermediaries by buying low and selling high. They also place trades for brokers on exchanges of which that broker is not a member.

BREAKING DOWN 'Third Market Maker'

A broker also facilitates the buying and selling of securities, but he or she accomplishes this task by directly matching up buy and sell orders. A third market maker might act as a buyer when an investor wants to sell, but he or she just wants to make a small, short-term profit from buying a security at a favorable price and selling it to another investor at a higher price. Third market makers sometimes pay brokers a small fee of a cent or two per share to direct orders their way. Sometimes brokers and third market makers are one in the same.

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RELATED FAQS
  1. What is the difference between a broker and a market maker?

    A broker is an intermediary who has a license to buy and sell securities on a client's behalf. Stockbrokers coordinate contracts ... Read Answer >>
  2. How do I buy an over-the-counter stock?

    The process of purchasing over-the-counter (OTC) stocks is different than purchasing stock from companies on the NYSE and ... Read Answer >>
  3. What's the difference between a Nasdaq market maker and a NYSE specialist?

    What's the main difference between a specialist and a market maker? Not much. Both the New York Stock Exchange (NYSE) specialist ... Read Answer >>
  4. How do I place an order to buy or sell shares?

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  5. Why do limit orders cost more than market orders?

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    The over-the-counter bulletin board (OTCBB) is a regulated quotation service for over-the-counter (OTC) securities. The securities ... Read Answer >>
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