Market Maker

A market maker participates in the securities market by providing trading services for investors and boosting liquidity in the market. They specifically provide bids and offers for a particular security in addition to its market size. Market makers typically work for large brokerage houses that profit off of the difference between the bid and ask spread

• A market maker is an individual participant or member firm of an exchange that buys and sells securities for its own account.
• Market makers provide the market with liquidity and depth while profiting from the difference in the bid-ask spread.
• Brokerage houses are the most common types of market makers, providing purchase and sale solutions for investors.
• Market makers are compensated for the risk of holding assets because a security’s value may decline between its purchase and sale to another buyer.
• While brokers compete against one another, specialists post bids and asks and ensure they are reported accurately.