Market maker  – firma- broker / dealer , assumes the risk of acquiring and storing in their accounts a particular securities of the issuer in order to organize their sales. Market makers act on the exchange and over-the-counter market as direct participants in transactions. On the New York Stock Exchange, market makers are called “experts.” As a rule, market makers act on both sides – both sellers and buyers. A typical market maker has an obligation to sell at least 1000 shares for each of his clients (approximately 20-30 for one market maker). Transactions are carried out by phone or via the Internet. and take seconds.

On the exchange, a market maker can be, for example, a brokerage firm that, under an agreement with the exchange, undertakes to keep simultaneously placed orders with the difference between the purchase and sale prices (see spread ) for a specified time (say, 90% of trading time). no more than the stipulated value, for this the exchange provides certain market benefits to the market maker, for example, on payment of the fee.


Market participants in the capital markets are generally individuals , institutional investors , non-banks , credit institutions or stockbrokers . Of these, only credit institutions, in particular investment banks and major banks , as well as stock brokers as market makers in the rule . Market-Making belongs to the category of continuous trading in which the market maker regularly represents the counterparty to the market and acts as the determining contract counterparty. 

Market Makers can trade in both trading venues ( exchanges , multilateral trading systems and organized trading systems) as well as outside trading venues, ie OTC (over the counter). At a trading venue, market makers are participants in this trading venue and offer the remaining participants the immediate conclusion of transactions. The OTC Market Maker interacts with its clients outside a trading venue.

Market makers determine the trading volume and the respective prices at which they buy ( bid price ) and to which they want to sell ( ask price ). Frequently market makers name (“ask”) the bid and offer price at the same time. In this case we speak of quotes ; the market maker takes over the one quotation. But it can also be that a market maker at one point only offers to buy or sell. This is particularly possible in an order book, as far as a market maker is not required to quote to a certain extent.

The market maker enters an open position for his own account by delivering from his own stock and acquiring it for his own stock ICO/ITO and IPO. Essential feature is its constant presence during the business or stock exchange period. Market Maker is “a trader who is always willing to buy or sell certain securities on demand either at a price he has specified, or at a higher price at the same time, without knowing whether or not the requester want to buy or sell “. 

Although market-making and designated sponsorship are often used interchangeably, these are similar but strictly speaking quite different activities. In contrast to Designated Sponsoring, the securing of liquidity is not carried out on behalf of an issuer, but rather for obtaining own benefits. For example, stock brokers who, in the course of their activity as market makers, obtain liquidity from Eurex for a certain number of securities. B. at least 85% guarantee, as remuneration certain discounts on the paid trading fees .

At NASDAQ , market maker firms are both commission and proprietary and represent a large part of NASDAQ’s turnover. There are currently 550 Market Maker companies, of which only about 10 are really important. All market makers in the US must be a member of the National Association of Securities Dealers ( NASD ) and must meet certain requirements, such as: B. have a certain minimum capital. The market makers can be identified by a four-digit abbreviation, the so-called Market Maker Identifier , the MMID.


There are generally three types of market making:

  • In permanent market making (PMM ), the market maker sets permanent buy and sell orders for a value in the trading system.
  • In Advanced Market Making (AMM ), minimum criteria set by the relevant exchange are met in order to receive corresponding reimbursements or reductions.
  • When quoting on request ( regular quotation ), the market maker provides a price at the special request of a market participant.