What Is a Market Maker? | Citadel Securities (2024)

Powering Competitive Markets

Market makers compete with other market participants to execute trades. This intense competition requires continuous innovation, powerful predictive analytics and robust systems—which drive better outcomes for investors.

What Is a Market Maker? | Citadel Securities (2)

Market makers provide a ‘two-way quote’ to the market, which means they are willing to both buy and sell a security at a competitive price in all market conditions.

By taking the market risk to trade in this fashion, market makers can earn a ‘spread’ between the bid (what someone is willing to pay for a security) and the ask (what someone is willing to sell it for). This is known as the bid-ask spread.

In today’s highly competitive and efficient markets, the bid-ask spread is often much less than one percent of the price of a security. To generate revenue, a market maker must accurately price securities almost instantaneously and execute trades at significant scale.

We also need to carefully manage our risk and anticipate how market dynamics might change over time.

What Is a Market Maker? | Citadel Securities (3)

Market making is a highly regulated business. We are registered with the CBI, CFTC, FINRA, HK SFC, IIROC, OSC, SEC and UK FCA.

We work closely with regulators in all of the markets in which we operate to understand their priorities and lend our knowledge and expertise.

We seek to be a force for positive change in market structure globally, strengthening investor confidence in market integrity and access to financial opportunity.

What Is a Market Maker? | Citadel Securities (2024)


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