Yes, market makers make money. They generally do not make money by charging commissions or fees (though sometimes they can) but rather earn their money through the difference between bid/ask spreads. They buy securities at lower prices and aim to sell them at higher prices. They transact for their own accounts.<\/p>" } } , { "@type": "Question", "name": "Do Market Makers Hold Inventory?", "acceptedAnswer": { "@type": "Answer", "text": "
Yes, market makers hold a supply of securities so that they can readily facilitate the buying and selling of securities; in this way, they maintain liquidity in the market. This is their inventory. The inventory needs to be carefully managed by hedging as price fluctuations could impact the value of their securities.<\/p>" } } , { "@type": "Question", "name": "Do Brokers Need a License?", "acceptedAnswer": { "@type": "Answer", "text": "
Yes, brokers need a license (or multiple) to facilitate transactions for their clients. Most commonly they need the Series 7 and Series 63 licenses, which are administered by the Financial Industry Regulatory Authority (FINRA).<\/p>" } } ] } ] } ]