A market maker buys and sells securities to provide liquidity in financial markets.
A market maker is an entity that buys securities for and/or sells securities from its inventory position. Market makers help provide liquidity in financial markets by standing ready to buy or sell securities.
For example, a market maker may quote buying at [tex]$99.00 and selling at $[/tex]99.125 for a certain bond, profiting from the spread. This continuous buying and selling by market makers help ensure there are always willing buyers and sellers in the market.
Market makers play a crucial role in maintaining smooth and efficient trading operations in exchanges like the New York Stock Exchange.
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