Markets & trading
A market maker regularly quotes prices at which it is prepared to buy and sell under venue or commercial arrangements. It supports immediacy while managing inventory and information risk.
Make it click
A dealer keeps a buy price and a sell price available so customers need not arrive in perfectly matched pairs. The gap helps compensate for stock, timing and uncertainty.
Now put that into markets
Market makers post bids and asks, trade with incoming orders and hedge accumulated positions. Obligations and incentives differ across venues.
Spreads reflect competition, volatility, adverse-selection risk, inventory and costs. Automated firms can update quotes many times per second.
Distinguish a formal designated market maker from any liquidity provider or dealer. Evaluate quoted size, uptime and realised execution.
Market makers do not promise a fixed spread or infinite liquidity. During stress they may widen, reduce size or act within special venue protections.
Takeaway
