|
Two-Sided Market
What does it mean?
A market in which market makers (or specialists) are required to give both a firm bid and firm ask for each security in which they make a market. In other words, those making the market must be willing to both buy and sell at the prices they quote. Also known as two-way market.
In Other Words...
People mainly use this term in the context of the NASD requirement that Nasdaq market makers give both a firm bid and firm ask for each security in which they make a market. However, this term can also be applied in the bond market. For example, some broker-dealers make two-sided markets on larger, actively traded bonds and rarely make a two-sided market in inactively traded bonds. The theory is that this helps to enhance liquidity and market efficiency.
Related Links
Electronic Trading Tutorial - Learn about the systems that run the market. Topics include market makers, specialists, SuperDOT, ECNs, SOES, Level I, II, and III Access, and more.
Getting to Know Stock Exchanges - Find out the answers to all the questions you had about stock exchanges but were afraid to ask!
Related Terms
Bond | Market Makers | NASD | Nasdaq | One-Sided Market | Over-The-Counter - OTC
1 |
A | B |
C | D |
E | F |
G | H |
I | J |
K | L |
M | N |
O | P |
Q | R |
S | T |
U | V |
W | X |
Y | Z
|
