What is a market maker and how they market equilibria to be reached?
1 Answer
Nov 10, 2015
Market makers are participants with knowledge about advanced purchases and sales of participants. Market equilibrium is maintained when makers buy or sell purely to provide liquidity.
Explanation:
Market makers are participants with special knowledge and rules about purchases and sales of other market participants.
Market equilibrium is maintained when makers buy or sell purely to provide liquidity and offset imbalances. They create equilibrium by buying when there is excess selling or buying.
On the NYSE, market makers are named Specialists, and they man a post, and there is one Specialist per security. On the CBOE, market makers are called DMPs, and there can be several for any one security.
