Market makers – comfortable, sophisticated, expensive

The term market makers actually has two different meanings, although they lie quite close to each other.

In cases where both buyers and sellers need to meet each other at a single marketplace – which is an exchange in most cases, as we saw earlier – such a market is called a two-sided market. In two-sided markets, market makers provide liquidity to the market and this activity will be considered in the Liquidity providers – the whales that support this planet section.

In OTC markets, the situation is different. In these markets, only dedicated market participants can publish their bids or offers, and in some cases, they are not published at all. So, finding a counterparty for your trade could potentially be even more complex than in a two-sided market, and given that the quoting is not public, you can get your orders executed at really surprising prices (and of course, it’s not going to be...