Market Maker

An individual or firm that stands ready to immediately trade in a security at publicly quoted bid and ask prices, either on an exchange or an over the counter (OTC) market. Market makers usually hold an inventory of the securities in which they make markets. They aim to make a profit from the spread between the bid and ask prices and from market movements. Their bid/ask prices are a reflection of the positions they hold and their market outlook.

See also: Order Driven Market, Quote Driven Market, ECN