A market maker is a financial company or trader that creates liquidity in the market by ensuring the constant availability of buy and sell orders for a specific financial instrument. The role of a market maker is to maintain an active trading market, facilitate the buying and selling process and ensure continuous trading. The main functions of a market maker include:

➖Liquidity: The market maker ensures the availability of buy and sell orders for certain financial instruments. This allows traders to transact at current market prices and improves overall market liquidity.

➖Spreads: Market makers set spreads between buy and sell prices. This allows them to make money on the difference between these prices, called the spread. Spreads are typically tighter in markets where market makers operate, which helps reduce trading costs for traders.

➖Market stability: Market makers help prevent price fluctuations and volatility by maintaining a balance of supply and demand in the market. They are ready to act as a buyer or seller at any time and maintain stable price levels.

➖Information: Due to their active participation in the market, market makers receive a significant amount of information about current trends, supply and demand. This information may be useful to other market participants such as traders or investors.

However, it is worth noting that market makers do not guarantee the execution of all orders and may deviate from their obligations in some situations, especially in conditions of extreme volatility or lack of liquidity. They may also set limits on minimum and maximum order volumes. In general, market makers play an important role in ensuring liquidity and stability in financial markets by facilitating efficient trading and exchange of financial instruments.