Market maker definition
Market maker
A market maker is a trader or trading firm that quotes their own bid and ask prices on one or more assets. They'll own a set amount of the assets that they buy and sell, so they can quickly facilitate deals and ensure liquidity remains high.
You may, for example, see a market maker that quotes $2.00 per share to buy 100 shares of a particular company and $2.05 per share to sell them. The maker earns their profit from the difference between the two (the spread).
Market makers are most typically seen on the equities markets. However, they can be found in other asset classes too.
Can market makers manipulate stock prices?
Large market makers can manipulate the prices of the stocks they cover. For example, they could discourage buying by setting a higher price on a stock – and in doing so, lower its price. However, regulations such as Mifid II have introduced rules to deter manipulation that market makers must follow.