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emielbo2 t1_iua1276 wrote

Reply to comment by devowed in Is it just me, or is a a Market Makers' role in Order/Execution/Settlement confusing? Question: The CEO of Webull talked about their Market Maker, saying: "We're able to buy a share without driving up the stock 10% every time?" What does this work with Price Discovery & Supply & Demand? by ringingbells

Exactly, the explanation in the image is as clear as it gets...

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ringingbells OP t1_iua59eh wrote

No. Not exactly, it doesn't answer the question. The question was about Price Discovery/supply/demand as to why Webull can buy a stock without affecting the stock's price. I needed /u/Extremely-Bad-Idea's and /u/notausername86 comment for that.

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emielbo2 t1_iua5mbq wrote

He is describing a darkpool, not a market maker. Specifically a broker-dealer dark pool. A market maker is simply a company registered at an exchange (usually investment banks, but not always) that acts as a middleman, both buying and selling shares on the exchange so that there is enough liquidity to complete transactions. They make money by buying shares for P-1 and selling for P+1, so to say. When you place a buy order you pay slightly more than you would get if you sold that same share. Market makers earn their living on the difference between those two.

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