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A broker-dealer who is prepared to buy or sell a specific security - such as a bond or at least one round lot of a stock - at a publicly quoted price, is called a market maker in that security.
Other brokers buy or sell specific securities through market makers, who may maintain inventories of those securities.
There is often more than one market maker in a particular security, and they bid against each other, helping to keep the marketplace liquid.
The Stock Market and the corporate and municipal bond markets are market maker markets. In contrast, on the floor of the New York Stock Exchange (NYSE) there's a single specialist to handle transactions in each security.
- Browse Related Terms: Ask, BID, bid and ask, Dealer, Firm quote, Make a market, Market maker, Pink Sheets, Quotation (Quote), Trading floor