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Two sided market |
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Two sided marketA market in which both bid and asked prices, good for the standard unit of trading, are quoted. When customers or market makers are lined up on both sides (buy and sell) of a stock.Two sided market Similar MatchesFair market valueFair market valueThe traded value of an asset agreed by seller and buyer. Market makerMarket makerA market maker is a dealer on the London Stock Exchange, who acts as a wholesaler (i.e. quotes buy and sell prices to brokers) for the shares in which he is registered to trade as a principal. Market makers fulfil buy and sell orders from brokers, and create a marketplace for the buying and selling of shares to match supply and demand.The market maker makes a profit by committing his company's capital, aiming to buy low and sell high. There is always the possibility that he may buy high and sell low, thereby incurring a loss.The market maker who buys 10,000 shares of Marks & Spencer at £2.58 will attempt to sell them at a higher price e.g. £2.60, thereby realising a profit of £200. Conversely, he could sell stock for £2.60 and later buy it back for £2.58, again realising £200 profit. However, market forces can cause the market maker to sell stock at £2.58 then, due to high demand, have to repurchase (recoup his short position) at a higher price of £2.64, thereby losing £600.Stock prices constantly change, reflecting the supply and demand for those stocks. Low supply and high demand leads to high prices. High supply and low demand leads to lower prices.The market maker is obliged to honour the price he reflects on screen in the size he is showing. This size is often larger than the NMS, which is the minimum size in which a market maker must quote a two way price.If a broker wants to buy or sell a larger quantity of shares than the market maker is showing, i.e. showing 5x5 but the broker wants to buy 10,000 shares, the market maker may refuse to trade on these grounds. He is, however, still duty bound to sell the broker a minimum of 5,000 shares at the price shown. Furthermore, he may be able to offer him the full 10,000 shares, but the market maker can name the price. Gray marketGray marketRefers to goods that are sold for a price lower than, or through a distributor different than, that intended by the manufacturer. Most commonly, goods that are intended by their manufacturer for one national market that are bought there, exported, and sold in another national market. Mark to marketMark to marketAdjustment of the book value or collateral value of a security to reflect current market value. Black marketBlack marketAn illegal market, in which something is bought and sold outside of official government-sanctioned channels. Black markets tend to arise when a government tries to fix a price without itself providing all of the necessary supply or demand. Black markets in foreign exchange almost always exist when there are exchange controls. Further SuggestionsAuction marketsMarking to market Market sectors Marketed claims Emerging Markets Free index (EMF) Gray market Futures market Crossed market euromarkets Coherent Market Hypothesis Market Supervision and Surveillance Department Sideways market Intermarket Trading System (ITS) Bond market association Email marketing bear market Emerging market Market Value Approach Choice market Eurocurrency market Make a market Money market instruments Miss the price or market Non-market economy Playing the market |
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