Market makers are essential participants in financial markets, providing continuous liquidity and enabling efficient trading across various asset classes. These entities commit to quoting both buy and sell prices for financial instruments, ensuring that investors can execute trades even in the absence of natural counterparties. By narrowing the bid-ask spread, market makers reduce transaction costs and enhance market stability. Their revenue primarily comes from the difference between the buying and selling prices.
This article explores some of the most prominent market makers operating today, highlighting their histories, specializations, and global impact.
What Is a Market Maker?
A market maker is a firm or individual that consistently provides liquidity by standing ready to buy or sell specific financial instruments at publicly quoted prices. This role involves continuously displaying bid and ask quotes, facilitating smoother and more reliable trading for all market participants. Market makers are crucial in both traditional and digital asset markets, as they help mitigate volatility and improve price discovery.
In cryptocurrency markets, market makers play an especially vital role by ensuring sufficient order book depth and reducing slippage for traders. They utilize advanced algorithmic systems to manage large volumes of trades across multiple exchanges simultaneously.
Overview of Top Market-Making Firms
Empirica
Founded in 2013, Empirica is a globally recognized market maker and liquidity provider. The company employs a proprietary trading system that executes millions of trades daily across stock and cryptocurrency markets. With connections to over 50 cryptocurrency exchanges, including major decentralized platforms, Empirica ensures broad market access. Its software is also operational on traditional venues like the Warsaw Stock Exchange and major banks.
Since 2017, Empirica has focused extensively on crypto markets, assisting exchanges and Web3 projects in enhancing liquidity. The company leverages eight years of refined market data to optimize its strategies, generating hundreds of millions in monthly organic trading volume.
👉 Explore advanced liquidity solutions
Flow Traders
Headquartered in Amsterdam, Flow Traders is a renowned proprietary trading firm established in 2004. Initially specializing in exchange-traded products (ETPs), the company has expanded into fixed income, foreign exchange, commodities, and digital assets. It serves over 2,000 institutional clients, including hedge funds, banks, and insurance companies, and quotes nearly 8,000 ETPs worldwide. Flow Traders employs more than 700 people and utilizes high-frequency and quantitative strategies.
Citadel Securities
Citadel Securities, founded in 2002 and based in Miami, is one of the world's largest market-making firms. Operating in over 50 countries, it acts as a designated market maker on the New York Stock Exchange (NYSE) and provides liquidity across more than 100 trading venues. The firm handles approximately 22% of U.S. equity market volume and employs over 1,600 professionals.
DRW
Established in 1992 in Chicago by options trader Don Wilson, DRW has evolved into a major market maker across multiple asset classes. The firm executes an average of one million trades daily, utilizing algorithmic systems capable of processing 1,000 trades per second. DRW provides liquidity in ETFs, fixed income, commodities, currencies, and crypto assets, employing over 1,600 people.
Jane Street
Jane Street is a global liquidity provider and trading firm with offices in New York, Hong Kong, London, Amsterdam, and Singapore. Since its inception in 1999, it has grown significantly, now pricing and trading more than 5,000 ETFs worldwide. The firm also operates in bonds, options, equities, and cryptocurrencies, trading on over 200 electronic exchanges. Jane Street employs over 1,800 people and has developed proprietary platforms like JCX for digital assets.
Optiver
Founded in 1986 in Amsterdam, Optiver is one of the oldest market-making firms globally. It began as a market maker on the European Options Exchange (now Euronext) and is now a member of several international trading associations. Optiver serves as an official liquidity provider on more than 15 U.S. exchanges and is a leading market maker in Hong Kong index and single-stock options. The firm employs over 1,800 people and maintains relationships with 6,000 European counterparties.
SIG (Susquehanna International Group)
SIG, established in 1987 and based in Pennsylvania, is a major proprietary trading firm with 14 global offices. It engages in all listed asset classes, including Bitcoin, and employs over 2,700 people. SIG is known for its quantitative strategies and extensive market presence.
Hudson River Trading (HRT)
HRT, founded in 2002 and headquartered in New York, is a quantitative trading firm active in over 200 markets worldwide. With offices in six countries, it employs more than 900 professionals and focuses on algorithmic and high-frequency trading.
Tower Research
Tower Research, one of the oldest automated trading firms, was founded in 1998 and is based in New York. It develops proprietary technology tools and implements quantitative strategies across various asset classes. The firm employs over 1,100 people and has offices in Europe and Asia.
Other Notable Firms
- IG Markets Ltd: A London-based online trading provider established in 1974, offering access to 19,000 investment markets and employing over 1,900 people.
- OTA, LLC: A U.S.-based financial services tech firm specializing in market making and proprietary trading, registered with the SEC and members of FINRA, SIPC, and major exchanges.
- IMC Financial Markets: A global market maker founded in 1989, active on over 100 trading venues and providing liquidity for 200,000 assets. IMC employs more than 1,600 people.
- Wolverine Trading: A Chicago-based firm founded in 1994, providing market-making services for equities, indexes, futures, ETFs, and bonds with a team of over 300 specialists.
Investment Banks in Market Making
Several major investment banks also offer market-making services:
- Morgan Stanley: Provides market making on Nasdaq, Nasdaq Options, Cboe, and NYSE Arca.
- Deutsche Bank: Recognized for award-winning market-making services, particularly in emerging markets.
- Nomura: Functions as a market maker in equity and fixed income securities globally.
- Société Générale: Serves as a market maker for multiple ETF issuers across Europe and Asia.
The Role of Market Makers in Cryptocurrency
In the cryptocurrency space, market makers like Empirica help stabilize prices and increase liquidity on both centralized and decentralized exchanges. By improving order book depth and reducing volatility, they build investor confidence and encourage higher trading volumes. For example, Empirica partnered with a globally recognized Web3 company listed on over 30 markets, reducing volatility from 165% to 9% and significantly increasing organic trading activity.
👉 Discover effective market strategies
Who Are the Biggest Market Makers?
Determining the largest market makers by revenue or profit is challenging due to the private nature of many firms. However, based on employee count, leading firms include SIG (Susquehanna International Group), Optiver, Jane Street, Citadel Securities, DRW, IG Markets, and IMC. While investment banks are large institutions, their market-making divisions are typically smaller than those of specialized firms.
Frequently Asked Questions
What exactly does a market maker do?
Market makers provide liquidity by continuously quoting buy and sell prices for financial instruments. They ensure that traders can execute orders promptly, even during low liquidity periods, and profit from the bid-ask spread.
How do market makers profit?
Market makers earn revenue from the difference between the price at which they buy an asset (bid) and the price at which they sell it (ask). This spread, multiplied by high trading volumes, generates their primary income.
Why are market makers important in crypto?
Cryptocurrency markets often experience high volatility and liquidity gaps. Market makers stabilize prices, reduce slippage, and enhance order book depth, making trading more efficient and secure for all participants.
Do market makers manipulate prices?
Legitimate market makers do not manipulate prices. Their role is to provide liquidity and improve market efficiency. However, they must operate within regulatory frameworks to prevent abusive practices like spoofing or wash trading.
How can a project benefit from a market maker?
Projects can achieve higher trading volumes, reduced volatility, and increased investor confidence by partnering with a market maker. This often leads to better market penetration and long-term growth.
What should I look for in a market-making partner?
Choose a partner with a proven track record, robust technological infrastructure, and experience in your specific asset class. Transparency, regulatory compliance, and customizable strategies are also key factors.