understanding financial jargon
A Market Maker is a specialist member of a stock exchange who commits to trading in shares, bonds and other investments, with greater frequency and often in larger quantities than most other investors.
The reason such market makers are required is that markets work well when there is a good number of buyers and sellers so that deals can get done quickly. This keeps the market liquid. If there are not enough buyers and sellers, the market is likely to be 'illiquid', where someone wanting to buy now may have to wait days, weeks or months before a seller appears.
Each market maker sets his own bid price and offer price, so in markets where many market makers compete (such as the FTSE 100 or the Dow Jones Industrials) the spread between bid and offer will be narrow. In markets where there is just one or two markets makers (such as with smaller companies) the spread can be fairly wide.
What to do if you need more help
If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
We hope you found this information useful.
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