providing liquidity

[londonkid]

Do some markets have reduced commissions are even rebates?

essentially yes the exchanges have reps that visit the larger volume players. The exchanges have market maker program that the firm can join. In return they get extremely low round trip cost and/or rebates. The competition is huge for the most liquid products however there are plenty of opportunities for smaller players in less liquid properties and 'rival' products. A rival product is where an exchange is trying to take volume from the most liquid contract. For example Brent on CME has a rival product for ICE Brent and vice versa.

 

[londonkid]

I should be doing my homework, but without going into substantial detail, liquidity providers (generally) aim to capture the difference between the bid and the ask by offering liquidity on both sides. If you get filled on both sides you've earned the spread as compensation for your services.

As well as the market making in the traditional sense there are also other strategies which providing liquidity. So for example I might wait for a certain condition to be present and only then look to provide liquidity.

 

[cjbuckley4]

As well as the market making in the traditional sense there are also other strategies which providing liquidity. So for example I might wait for a certain condition to be present and only then look to provide liquidity.

Shhhhhhh, you're giving too much away.