Glossary entry
A market maker provides buying and selling quotations and stands ready to transact under the rules or commitments that apply to its role. By supplying liquidity, it can facilitate trading when other participants want immediacy. Its risks include inventory changes and adverse price moves, and it may adjust prices and quantities as conditions change.
Illustrative example
A market maker quotes a bid of 19.95 and an ask of 20.05. Trades on either side change its inventory and may prompt revised quotations.
What to consider
Market-making obligations vary by venue and product. The presence of a market maker does not guarantee tight spreads or unlimited liquidity.
General information, not a personal recommendation. Product availability, rights, and obligations are determined by the relevant provider, jurisdiction, and approved agreements.