Market maker (market-maker) is a brokerage service in India that assumes the risk of buying and storing a particular issuer in its securities accounts for the purpose of organizing their sales. Market makers work in the OTC market as direct participants in operations. As a rule, market makers can act both from buyers and sellers. The task of market makers is to maintain the liquidity of the over-the-counter market.

Most market makers are banks that also operate in the market for their account.

Role and utility of the market maker

Purchase and sale of shares to investors

The Designated Market Maker’s mission is to ensure the liquidity of the ETF in a given market. To do this, he sells shares on the stock exchange return of a sale price and proposes a bid price for the purchase of shares to investors who want to sell. Bid prices and the seller depend on the value of the underlying securities of the ETF and the costs and expenses associated with the purchase and sale of such securities.

An invaluable partnership

In addition to maintaining liquidity and market balance, the market maker performs other important functions. He makes sure that the price of each unit of the ETF reflects the intraday value of the underlying securities. Often the buy and sell offers of the ETFs in the market come from multiple participants. Each of them wants to be in able to match buyers and sellers.

This competition encourages them to display the best bid and ask prices. As a result, the spreads reflect not only market conditions (liquidity, etc.) for the underlying asset class, but they can also improve more than the characteristics of these assets if several market makers are engaged to maintain the liquidity of a particular ETF.