Recent Examples of market maker from the Web
Modern securities markets have been designed to encourage liquidity through a system of fees and rebates on transactions that encourages market makers to post quotes and orders.
In an illiquid market, there are fewer buyers and sellers, so a larger order could potentially move the prices quoted by market makers in an unfavorable direction.
One common reason is that there are fewer competing market makers for that security.
These include certain exchanges, wallet providers, market makers, and storage vaults.
Under the new blockchain arrangement, banks will conduct the transactions using Lumens, and then rely on local market makers to convert the Lumens into local fiat currency.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'market maker.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
First Known Use of market maker
Financial Definition of MARKET MAKER
What It Is
A market maker is a person or brokerage house that is always prepared to buy and sell securities in order to provide liquidity to the markets.
How It Works
By holding a disproportionately large number of a given security, a market maker is able to satisfy a high volume of market orders in a matter of seconds at competitive prices. If investors are selling, market makers are supposed to keep buying, and vice versa. They are supposed to take the opposite side of whatever trades are being conducted at any given point in time.
In this sense, market makers, as the name suggests, are able to satisfy the market demand for a security and facilitate its circulation. The Nasdaq, for example, relies on market makers within its network to ensure efficient trading.
Market makers profit through the market maker spread, not by betting on the direction of the security's price. They are supposed to buy or sell securities according to what kind of trades are being placed, not according to whether they think prices will go up or down.
Why It Matters
In contrast to conventional brokers, marker makers assume a high level of risk because of the high number of units they hold (their inventory). Market makers are entrusted with promoting market efficiency by keeping markets liquid. To ensure impartiality for the benefit of their clients, brokerage houses who act as market makers are legally required to separate their market making activities from their brokerage sales operations.
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