RE:RE:RE:RE:RE:RE:RE:so my simple minded questionThat is where the "Market Maker" comes in. All equities have one "owner" if you will... They are responsible for the smooth supply of shares no matter of quantity. Hope this helps......
What Is a Market Maker?
The term market maker refers to a firm or individual who actively quotes two-sided markets in a particular security, providing bids and offers (known as asks) along with the market size of each.
Market makers provide liquidity and depth to markets and profit from the difference in the bid-ask spread. They may also make trades for their own accounts, which are known as principal trades.
KEY TAKEAWAYS
- A market maker is an individual participant or member firm of an exchange that buys and sells securities for its own account.
- Market makers provide the market with liquidity and depth while profiting from the difference in the bid-ask spread.
- Brokerage houses are the most common types of market makers, providing purchase and sale solutions for investors.
- Market makers are compensated for the risk of holding assets because a security's value may decline between its purchase and sale to another buyer.
- While brokers compete against one another, specialists post bids and asks and ensure they are reported accurately.
Understanding Market Makers
Many market makers are often brokerage houses that provide trading services for investors in an effort to keep financial markets liquid. A market maker can also be an individual trader, who is commonly known as a local. Due to the size of securities needed to facilitate the volume of purchases and sales, the vast majority of market makers work on behalf of large institutions.
Each market maker displays buy and sell quotations for a guaranteed number of shares. Once the market maker receives an order from a buyer, they immediately sell off their position of shares from their own inventory. This allows them to complete the order. In short, market making facilitates a smoother flow of financial markets by making it easier for investors and traders to buy and sell. Without market making, there may be insufficient transactions and fewer investment activities.
A market maker must commit to continuously quoting prices at which it will buy (or bid for) and sell (or ask for) securities.1 Market makers must also quote the volume in which they're willing to trade along with the frequency of time they will quote at the best bid and best offer prices. Market makers must stick to these parameters at all times, during all market outlooks. When markets become erratic or volatile, market makers must remain disciplined in order to continue facilitating smooth transactions.