Market Maker

Market makers are essential participants who provide liquidity by maintaining bid and ask quotes for securities. They profit from the bid-ask spread while taking on inventory risk. Market makers must be ready to buy when others are selling and sell when others are buying, helping to smooth price movements and reduce volatility. In return for providing liquidity, they often receive rebates from exchanges. Major market makers include firms like Citadel Securities and Virtu Financial. Understanding market maker behavior can help traders anticipate price movements and liquidity conditions.