What is a Market Maker
A Market Maker is a bank or brokerage company that has a readily available ‘ask and bid’ price for any requested transaction. They therefore quote both a buy and a sell price, in order to make a potential profit.
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Market Maker explained
A Market Maker usually refers to a broker-dealer that accepts the risk of holding a certain number of shares of a particular security, in order to encourage and facilitate trading in that security. Most Market Makers are forex firms, therefore most deals are conducted over-the-counter and are therefore completely virtual.
The purpose of Market Makers is to keep the financial markets running fluidly and efficiently, because they are willing to quote both bid and offer prices for an asset. They are known as the ‘Market Maker’s’ because they set the price, and make the trading instruments directly available to clients.
A Market Maker offers to the public a platform for trading in the form of a bid price and ask price. It sells to and buys from its clients, and is compensated by price differences for the service of facilitating trade, reducing transaction costs and providing liquidity.
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