Market Maker Definition

Learn the definition of market maker and other ETF terminology from the etf.com glossary.

ETF
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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

Learn more about Market Makers

Market makers play a crucial role in the liquidity and smooth functioning of ETFs. These financial intermediaries facilitate trading by constantly quoting bid and ask prices for ETF shares. By providing a market for buyers and sellers, market makers enhance the efficiency of ETF transactions on the exchange. Their ability to swiftly buy or sell ETF shares helps maintain stable prices, reducing bid-ask spreads and minimizing the impact of large trades on the ETF's market value. In essence, market makers contribute to the overall market health and ensure that investors can readily buy or sell ETF shares at prevailing market prices.

ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.