What Is Market Maker?
A broker-dealer firm that actively buys and sells securities from its own inventory to provide liquidity and facilitate trading. Market makers quote both bid and ask prices and profit from the spread. They are obligated to display their quotes and maintain orderly markets, and are subject to special regulatory oversight.
Market Maker across 4 exams
Market Maker appears on the following exams. Each defines it in the context candidates are tested on:
- SIE
- A broker-dealer firm that actively buys and sells securities from its own inventory to provide liquidity and facilitate trading. Market makers quote both bid and ask prices and profit from the spread. They are obligated to display their quotes and maintain orderly markets, and are subject to special regulatory oversight.
- Series 66
- A broker-dealer who commits capital and stands ready to buy and sell specific securities at quoted bid-ask spreads, providing liquidity to the market. Understanding market makers' role and potential conflicts (e.g., principal trading) is essential for Series 66 candidates advising clients on trading costs and execution.
- Series 24
- A dealer that stands ready to buy and sell a particular security by continuously quoting both a bid and an ask price, providing liquidity to the market. Series 24 principals oversee market-making activity.
- Series 57
- A firm or individual that stands ready to buy and sell a particular security on a regular basis, quoting both a bid and an ask price to provide liquidity to the market.