Market Maker Law and Legal Definition

A Market Maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. Such companies accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security. Each Market Maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares. Once an order is received, the Market Maker immediately sells from its own inventory or seeks an offsetting order. This process takes place in mere seconds. Nasdaq is an example of an operation of Market Makers.