Market Maker – Providing Liquidity for Stock Exchanges
Have you ever wondered how to trade stocks in the stock market so quickly? When you place an order with your broker, you must have a seller to get the stock. So if there is no seller, then how do you get your stock? This is where the market maker intervenes and sells its shares to you. Market makers accumulate stocks of stock, sold when there are no sellers. People often refer to these market makers as MM.
Each stock exchange will have a different market maker, some of which is assigned to a stock. Nasdaq has many MM to provide liquidity to the market. Although the New York Stock Exchange has specified MM for each particular stock, but they are called experts, they must provide liquidity in the market. The main difference between Nasdaq and NYSE market makers is that NYSE experts interact with traders face-to-face. This is because the New York Stock Exchange is an auction-based exchange, there are traders in the field to communicate with experts, it is also an electronic exchange, and NASDAQ is an electronic exchange. When you enter a penny stock world, such as Pink Stocks and OTCBB stocks, there are many MMs that provide liquidity for stocks.
Each MM will have a four letter symbol that they trade. A popular stock market maker will be the Knights Equity Market, which is the symbol of NITE. Market makers trading on the Nasdaq or OTCBB will be large investment firms, they are not actually trading, because there is no exchange chassis, they are just electronic trading.