Make a Market

Make a market

Dealers are said to make a market when they quote bid and offered prices at which they stand ready to buy and sell.

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make a market

To quote a bid price at which a security will be purchased and an ask price at which the security will be sold. An individual makes a market by quoting the prices at which he or she will buy and sell.

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Make a Market

To be ready to trade at any time at the quoted price. The job of a dealer is to be able to make a market to promote liquidity for a security. When a broker-dealer makes a market, it allows the brokerage to trade from its own inventory, which is easier and less expensive than looking for other brokerages willing to trade. See also: Market maker.

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Make a market. A dealer who specializes in a specific security, such as a bond or stock, is said to make a market in that security. That means the dealer is ready to buy or sell at least one round lot of the security at its publicly quoted price.

Other broker-dealers turn to a market maker when they want to buy or sell that particular security either for their own account or for a client's account.

Electronic markets, such as Nasdaq, tend to have several market makers in a particular security. The overall effect of multiple market makers is greater liquidity in the marketplace and more competitive pricing.