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What Is a
A market maker participates in the market at all times, buying securities from sellers and selling securities to buyers.
Market makers provide liquidity, which ensures investors can trade quickly and at a fair price in all conditions. In turn, this generates confidence in the markets.
Powering Competitive Markets
Market makers compete with other market participants to execute trades. This intense competition requires continuous innovation, powerful predictive analytics and robust systems—which drive better outcomes for investors.
The Importance of Market Making
Liquidity & Depth
Market makers make it easier for investors to buy or sell a security quickly, or in large volumes. In financial terms, they deliver liquidity and depth to the market.
In times of volatility, market makers provide liquidity and depth when other participants may not—ensuring markets stay resilient.
Market makers’ presence streamlines the execution of trades, reduce fluctuations in prices and identify supply and demand gaps.
These activities build confidence among market participants. Market makers help ensure that markets function reliably, and remain resilient even during times of market turbulence.
Efficient Capital Allocation
One function of market makers is to ensure orderly trading of publicly listed securities, particularly during Initial Public Offerings (IPOs) or other capital raising activities.
These activities contribute to the efficient flow of capital and broader economic growth.
A Better Deal for Retail Equities
For retail equity investors, market makers regularly offer a better price on securities than the public exchanges. This is known as price improvement.
The benefits of price improvement flow directly into investors’ pockets. We saved retail investors over $1.4 billion in 2021 alone. Our work helps reduce the cost of market participation and increase access to financial opportunity.
Our clients seek the best execution. Our efforts to deliver ultimately benefit the entire marketplace.
The Business of Market Making
Market makers provide a ‘two-way quote’ to the market, which means they are willing to both buy and sell a security at a competitive price in all market conditions.
By taking the market risk to trade in this fashion, market makers can earn a ‘spread’ between the bid (what someone is willing to pay for a security) and the ask (what someone is willing to sell it for). This is known as the bid-ask spread.
In today’s highly competitive and efficient markets, the bid-ask spread is often much less than one percent of the price of a security. To generate revenue, a market maker must accurately price securities almost instantaneously and execute trades at significant scale.
We also need to carefully manage our risk and anticipate how market dynamics might change over time.
Values, Risk and Regulation
Market making is a highly regulated business. We are registered with the CBI, CFTC, FINRA, HK SFC, IIROC, OSC, SEC and UK FCA.
We work closely with regulators in all of the markets in which we operate to understand their priorities and lend our knowledge and expertise.
We seek to be a force for positive change in market structure globally, strengthening investor confidence in market integrity and access to financial opportunity.
We believe when the markets are more competitive, everybody benefits. That’s why we’re a leading voice on how to enhance the markets to work even better than they do today.View Policy Insights
- What We Do