Matt Levine, Bloomberg, Market-Making Is Making Markets, here.
I’ve been on a servicey kick lately so today I’m going to do something really simple and servicey and tell you what “market-making” is. Fortunately, the definition is right there in the name. “Market-making” is the job, or hobby,1 of making markets. What a market-maker does is make markets.
Here is not what a market-maker does:
- “bring together buyers and sellers of securities.”
- “lining up buyers and sellers of assets.”
- “make money matching buyers and sellers.”
Nope! A market-maker makes markets. What is a market? Here is a market:2
This caption is a little superfluous but here we are.