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Finance
Market Maker
A firm or participant that continuously provides buy and sell prices for financial assets to maintain liquidity in the market. Market makers ensure that investors can trade quickly without waiting for a counterparty. They earn profits from the difference between buying and selling prices, called the spread.
Market makers are essential for healthy, liquid markets. By providing continuous quotes, they make it possible for buyers and sellers to transact at any time, reducing delays and improving market confidence. The spread between their buy and sell prices provides revenue, but their main contribution is maintaining order and consistency in trading activity.
They are particularly important in less active markets, where natural buyers and sellers may be scarce. Their work ensures that financial markets operate reliably and efficiently for everyone.