Updated: N.Y.

Market Maker

A "market maker" is a firm that stands ready to buy and sell a particular
stock on a regular and continuous basis at a publicly quoted price. You'll
most often hear about market makers in the context of the Nasdaq or
other "over the counter" (OTC) markets. Market makers that stand ready
to buy and sell stocks listed on an exchange, such as the New York Stock
Exchange, are called "third market makers." Many OTC stocks have more
than one market-maker.

Market-makers generally must be ready to buy and sell at least 100 shares
of a stock they make a market in. As a result, a large order from an investor
may have to be filled by a number of market-makers at potentially different
prices.

To learn more about the basics of trade execution, you should read
Trade Execution: What Every Investor Should Know.

The Penny Stock Market or penny stocks are much influenced by Market
Makers and traders. Many Market Makers tend to "trade" penny stocks or
micro cap stocks for their "Firm" they represent. Trading in penny stocks
and penny stock picks need to consider Market Makers a good example of
Market Makers is in viewing NASDAQ Level II.

We have provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.

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This is not an offer or solicitation: The term “penny stock” generally refers to low-priced (below $5), speculative securities of very small companies. While penny stocks generally trade over-the-counter, such as on the OTC Bulletin Board or in the Pink Sheets, they may also trade on securities exchanges, including foreign securities exchanges. In addition, penny stocks include the securities of certain private companies with no active trading market. Always perform your own due diligence and consult a professional financial advisor. .