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Re: Potomac post# 47604

Tuesday, 05/21/2019 10:13:46 AM

Tuesday, May 21, 2019 10:13:46 AM

Post# of 75813
Market Makers are 'hired'. ...........
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Market Maker
A market maker helps to create a market for investors to buy or sell securities. Market makers are typically large banks or financial institutions. They help to ensure there's enough liquidity in the markets, meaning there's enough volume of trading so trades can be done seamlessly. Without market makers, there would likely be little liquidity. In other words, investors who want to sell securities would be unable to unwind their positions due to a lack of buyers in the market.

Market makers help to keep the market functioning, meaning if you want to sell a bond, they are there to buy it. Similarly, if you want to buy a stock, they're there to have that stock available to sell to you.


Market makers are useful because they are always ready to buy and sell as long as the investor is willing to pay a specific price. Market makers essentially act as wholesalers by buying and selling securities to satisfy the market—the prices they set reflect market supply and demand. When the demand for a security is low, and supply is high, the price of the security will be low. If the demand is high and supply is low, the price of the security will be high. Market makers are obligated to sell and buy at the price and size they have quoted.

Sometimes a market maker is also a broker, which can create an incentive for a broker to recommend securities for which the firm also makes a market. Therefore, investors should perform due diligence to make sure that there is a clear separation between a broker and a market maker.

https://www.investopedia.com/ask/answers/06/brokerandmarketmaker.asp