Market Makers

The Financial Industry Regulatory Authority (FINRA) is the sum of the merger between the National Association of Securities Dealers' (NASD) and the New York Stock Exchange’s (NYSE) regulation committees. It is the organization that implements, maintains and regulates the various firms that make up the market maker system and the investing public. There are currently almost 500 members. These are constantly changing as mergers, regulatory suspensions or time cause them to change names, symbols or specific securities that they deal in. Not all market makers make a market in all securities. Their very name describes their primary function – to make a market in a stock by always being willing to buy and sell that equity at all times during regular market hours. They wear several other hats as well – they often represent themselves, individual clients and institutional clients.

Below are some facts and figures on market makers:

  • A brokerage company that maintains a bid and offer price in a given security - ready to buy or sell at their publicly-quoted prices.
  • Process orders for their own account, their customers and perhaps other broker dealers.
  • Simply put: market makers buy low and sell high, or sell high and buy low, sometimes within minutes.
  • No one market maker is privy to all orders.
  • Market makers with the most orders (liquidity) get most of the new orders.
  • Market makers scalp all day, going long and short.

Some Common Market Makers:

Cowen and Company COWN
J.P. Morgan Securities Inc. JPMP
Goldman Sachs GSCO
Morgan Stanley MSCO
Deutsche Bank Securities DBAB
Knight Equity Markets NITE
Merrill Lynch MLCO
Automated Trading Desk Financial Services AUTO
Prudential Equity Group PRUS
Citigroup Global Markets SBSH
Wachovia Capital Markets WCHV
UBS Securities UBSS
Timber Hill TMBR
Piper Jaffray & Co PIPR
E*Trade Capital Markets ETRD
Oppenheimer & Co. CIBC
Credit Suisse Securities FBCO
Banc of America Securities BOFA
Thomas Weisel Partners TWPT
Citadel Derivatives Group CDRG
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