Often we hear the term Market Maker, but what is the real meaning of Market Maker?
Market Maker in the true sense means MARKETERS, traders, governments, banks, financial institutions, and market makers.
Market Maker in the general sense is usually referred to as a broker whose name dealing desk, the real official sense of the market maker in the mention of the term in government agencies / regulator Market Maker is SAME with market participants. All brokerage firms should be called market makers, including banks, financial institutions and so on, but that does not mean they are dealers or dealing desks.
On wikipedia it is also written that the definition of the market maker is:
"Market makers or liquidity providers are companies, or individuals, who quote either the purchase price and the selling price in a financial instrument or commodity stored in the inventory, in the hope of profiting the offer-offer spread or turn Exchange: Most foreign exchange (Forex) is a market maker that sells and buys from its clients and is compensated by price differences for liquidity provision, reduced transaction costs and trade facilitation. "
So if we learn more Market Maker, it's just that the term is commonly known as Market Maker = Broker Bandar, while if mentioned in official terms is the market maker is market Participants or the liquiditor itself (NOT ALWAYS AIRPORT).
And also in some brokerage companies can also be written about the mention of Market Maker (usually in the brokerage firms listed in regulators such as NFA / CFTC, FCA, MiFID and ASIC), but the mention is only as a Language Law where the real meaning It does not mean he is a broker dealer , But that's just legal language.
Market Maker (market participants) for the category of companies Broker consists of 2 types, namely broker DEALING DESK and NON DEALING DESK.
- A market maker that Dealing Desk (dealer) is the opposite of a trader's trader position, so if you lose a broker then get money from your loss is. And this type of broker limits aggressive trading techniques and also many rules, in addition they use the fixed spread method (because this type can create their own conditions that can be different from the market), and usually this type of broker can be a fantastic welcome bonus like 30%, 50% even 100%, which according to logic is not possible from the benefits of the spread only. Then other bad factors are vulnerable to market manipulation or technical factors.
Rental table brokers are also not necessarily bad as long as they are set up properly in trustworthy regulators such as CFTC, FCA, MiFID and ASIC, so that all of their activities are overseen by government regulators to avoid abuse. But if he is a dealing desk broker that bucket shop (sidewalk pavement) that should be avoided, usually a bucket shop is a broker centered in this country is not clear (a kind of British virgin island, georgia, mauritius, belize, seychelles) Or russia, There is an official watchdog and is worth doing.
- For market broker maker that type Non Dealing Desk or Risk Desk get main income from difference between selling and buying price or spread only (still not reduced by liquidity exchange rate).
Non-Dealing Desk Brokers do not fight their customers (do not take advantage of customer losses), but they only collect traders as their clients and then every transaction is thrown into the liquidator or market, or as a bridge. But the broker can also participate as a Participant or as a Trader in the market, depending on the brokerage company's management policy (but not refuse or disrupt the order of its customers).
Non Dealing Desk is also called Risk Desk, because this broker transfers the risk to the liquidator or the market (not against and does not intervene to customer transactions), so the broker does not risk losing trading as can happen at dealing desk. Realtor. And these types of brokers only benefit from the difference in the purchase price alone, not from loss of customers or from customer margins.
Non Dealing Desk broker Market Maker consists of ECN, STP and DMA brokers, and Hybrid.
Similarly, the term "Broker" can also mean 2 kinds:
If in Indonesia mentioned brokers that mean people who manage or handle our funds, while the company referred to as a futures company (futures company or brokerage company).
While abroad mentioned about Brokerage which means Futures Company (futures company), while for managers of funds of others referred to as fund manager or money manager.
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