These are professional traders, often working for banks, who commit to provide liquidity in securities so that other market participants can buy or sell them.

Their willingness to trade carries risk (they might for example get stuck with a large amount of a stock that cannot be easily sold) and this is reflected in the bid to offer gap, or “spread”, for a given security. The wider this spread the riskier the stock, measured on the basis of illiquidity. Popular stocks may have many market makers competing for business whereas less popular stocks may have only few or even just one.

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