To be ready, willing, and able to buy or sell a particular security as a dealer. The individual who does this is called a specialist if the security is listed, or a Market Maker if the security is traded over-the-counter.
Maintain firm bid and offer prices in a given security standing ready to buy or sell Round Lots at publicly quoted prices. The dealer is called a market maker in the over-the-counter market and a specialist on the exchanges. A dealer who makes a market over a long period is said to maintain a market.
A dealer who specializes in a specific security, such as a bond or share, is said to make a market in the security. That means the dealer is ready to buy or sell the bond, or at least one round lot of the share, at its publicly quoted price. Other dealers regularly turn to a market maker, if there is one, when they want to buy or sell that particular security. The overall effect of having multiple marketmakers in a particular security, which is typical of U.S. electronic markets such as the Nasdaq Stock Market (Nasdaq), is greater liquidity in the marketplace and, ideally, more competitive prices.
The action of a broker-dealer when, on a regular basis, it holds itself out to other firms as ready to buy or sell a particular security for its own account. Such a firm accepts the risk of holding a position in the security to facilitate trading.
The process of maintaining firm bid and asked prices in a given security by standing ready to buy or sell round lots at publicly quoted prices. In the over-the-counter market, the dealer is called a "market maker", and on the exchanges, a "specialist". See: Asked Price; Market Maker; Over The Counter; Round Lot; Specialist