I did say if a retail trader has direct market access, i.e. he can also buy the bid and sell the offer.
What other advantage (if any) does a MM have ?
Retail traders pay comms, MM pay overheads.
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difference between market-making and just proprietary trading?
- Thread starter carl1111
- Start date
What other advantage (if any) does a MM have ?
Retail traders pay comms, MM pay overheads.
Quote from Profitaker:
I did say if a retail trader has direct market access, i.e. he can also buy the bid and sell the offer.
What other advantage (if any) does a MM have ?
Retail traders pay comms, MM pay overheads.
And I said quoting a two-sided market, retail traders are not allowed to do that.
Quote from Profitaker:
Certainly can in the UK.
So what happens in the US for example if you place a buy limit order ? Does it sit on the bid or the offer ?
Quoting a two-sided market means having a bid and an ask in. I.e. a buy limit and a sell limit in at the same time. That's market maker's privelege!
So back to the original question...Quote from MTE:
If you say so.....
If a retail trader has direct market access, does a MM really have any significant advantage over the retail trader ?
Ok, a retail trader has to pay broker comms, but a MM has overheads such as office rent, staff costs etc, etc.
Where exactly is the MM's edge ?
Quote from Profitaker:
Well, I can do both [make a two sided market], and
at the same time !
On U.S. option exchanges, your broker allows you to
make two sided markets? I find that difficult to believe.
Does your broker also waive the cancelation fees as
you adjust your buy and sell limit orders up and down?
Whom are you trading through?
I don't trade the US market so I wouldn't know what the situation is there.Quote from Kevin Schmit:
On U.S. option exchanges, your broker allows you to
make two sided markets? I find that difficult to believe.
Not applicable, there are no cancellation fee's in the first place.Quote from Kevin Schmit:
Does your broker also waive the cancelation fees as
you adjust your buy and sell limit orders up and down?
Rather keep it to myself if you don't mind. But there are several UK brokers offering direct market access. It's not so unusual here.Quote from Kevin Schmit:
Whom are you trading through?
We seem to have digressed..... My point really is regarding the perceived advantage a MM has over retail.
Quote from Profitaker:
I don't trade the US market so I wouldn't know what the situation is there.
Not applicable, there are no cancellation fee's in the first place.
Rather keep it to myself if you don't mind. But there are several UK brokers offering direct market access. It's not so unusual here.
We seem to have digressed..... My point really is regarding the perceived advantage a MM has over retail.
US brokers also offer direct market access, but, as far as I'm aware, it is not the same as being a market maker, but that's beside the point, anyway.
I don't think we have digressed. Being able to have orders on both sides at the same time is an important consideration when comparing retail and market makers in the US, but it is, obviously, not an issue in the UK. Thus, it would seem that the exact "list" of advantages of being a market maker depends on which country/market you're looking at.
So, in the US, this would be being able to quote a two-way market, being able to see the order flow and haircuts based margining, to name a few.