Listen to a Business English Dialogue about Market maker
Stephen: Hi Danielle, do you know what a market maker is in finance?
Danielle: Yes, I think a market maker is a firm or individual that facilitates trading by providing liquidity and making bids and offers for securities.
Stephen: That’s correct. Market makers play a crucial role in ensuring smooth and efficient functioning of financial markets by maintaining orderly trading and narrowing bid-ask spreads.
Danielle: How do market makers make profits?
Stephen: Market makers earn profits by buying securities at the bid price and selling them at the ask price, capturing the spread between the two prices.
Danielle: Are market makers involved in all types of securities trading?
Stephen: Market makers are primarily active in liquid markets for stocks, bonds, options, and currencies, where there’s a constant flow of buy and sell orders.
Danielle: Can market makers impact market prices?
Stephen: Yes, market makers’ activities can influence short-term price movements, especially in less liquid markets, but their primary role is to provide liquidity and facilitate trading.
Danielle: Are there any regulations or oversight for market makers?
Stephen: Yes, market makers are subject to regulations and oversight by financial authorities to ensure fair and orderly markets and prevent market manipulation.
Danielle: How do investors benefit from market makers?
Stephen: Investors benefit from market makers’ presence by having access to continuous liquidity, tighter bid-ask spreads, and smoother execution of trades.
Danielle: Thanks for explaining that, Stephen. Market makers seem to play a crucial role in keeping financial markets running smoothly.
Stephen: No problem, Danielle. They’re an essential part of the market ecosystem, providing liquidity and enhancing market efficiency.