Market Maker (MM)

A market maker is a financial institution, such as a bank or brokerage firm, that participates in the buying and selling of securities, such as stocks or options, by providing liquidity to the market.

Market makers are designated to maintain orderly and liquid markets by quoting both a bid and ask price for securities, which helps to ensure that buyers and sellers can trade with one another. They do this by standing ready to buy or sell a security at all times, even when there may be no other buyers or sellers in the market.

Market makers earn profits by buying securities at a lower price and selling them at a higher price, or by selling securities at a higher price and buying them back at a lower price. The difference between the buying and selling price is known as the “spread,” and it represents the market maker’s profit.

Market makers play an important role in the financial markets by providing liquidity and ensuring that there are always buyers and sellers available for securities. They also help to reduce volatility in the market by buying and selling securities when there is an imbalance in supply and demand.

In recent years, the role of market makers has evolved with the rise of electronic trading platforms and the use of algorithms to execute trades. Nevertheless, market makers remain an important part of the financial ecosystem, particularly in over-the-counter markets and for less-liquid securities.

On this page, we list brokers and exchanges that adopt Market Maker (MM) model to provide the service.