Market Making Firms

What a market maker does

A market maker continuously quotes both a price to buy (the bid) and a price to sell (the ask) for an instrument, standing ready to trade with whoever arrives. It earns the difference between the two — the spread — on the trades it completes, and it is paid by exchanges in some markets for meeting quoting obligations. The risk is inventory: after buying from a seller, the market maker holds a position until it can offset it, and prices can move against it in the meantime.

Modern electronic market makers manage that risk with pricing models and fast hedging. An options market maker, for example, hedges the delta of the options it has traded using the underlying stock or futures; an ETF market maker hedges with the basket of underlying securities and can create or redeem ETF shares as an authorised participant. Speed matters because quotes must be updated before the market moves past them, which is why market making overlaps heavily with high-frequency trading.

Market makers vs. other trading firms

• Market maker vs. proprietary trading firm: almost every electronic market maker is a proprietary trading firm — it trades its own capital, not client money. But not every prop firm makes markets; some take directional or statistical-arbitrage positions instead.
• Market maker vs. HFT firm: "high-frequency" describes how fast a firm trades, not what it does. Most large market makers are HFT firms, and many HFT firms run both market-making and liquidity-taking strategies.
• Market maker vs. hedge fund: hedge funds such as Two Sigma or D. E. Shaw manage outside investors' money and are paid fees. Market makers trade their own balance sheet. Citadel (the hedge fund) and Citadel Securities (the market maker) are separate companies for this reason.
• Market maker vs. broker: a broker executes orders on behalf of clients. Wholesale market makers such as Citadel Securities and Virtu fill retail orders routed to them by brokers — known as payment for order flow in the US — but they are still trading as principal.

Electronic market makers in the directory (31)

Firms whose core business is quoting two-sided markets in listed equities, options, futures, ETFs, FX or bonds. Several also run other proprietary strategies.

Crypto market makers (8)

Firms that provide liquidity on crypto exchanges and OTC desks. This segment is younger and less regulated than listed-market making; check each firm's licensing in your jurisdiction.

Working at a market maker

Trader and researcher interviews at market makers typically test mental arithmetic, probability and expected value, and decision-making under uncertainty, often through market-making games where the candidate quotes a spread on an unknown quantity. Software and hardware engineering roles focus on low-latency systems. Unlike retail funded programs, there is no fee to apply: firms hire graduates and experienced staff on salary plus bonus. See the prop firm vs quant firm explainer for how this differs from evaluation-based funding.