Market makers have existed in financial markets for hundreds of years and to this day service a vital function of these capital markets. Natural buyers and sellers may not enter the market place at the same time. Market makers bridge this time gap by providing continuous, two-sided quotations, thus allowing natural buyers and sellers to immediately trade with the market makers’ quotes. In performing this intermediation role, market makers do not take directional positions in the financial products they quote. Most market makers target a zero carry position overnight, and will attempt to end each day without any positions. Market makers profit from the spread differential between Bid (market Buy) and Offer (market Sell) prices. Market makers also profit through the arbitrage of inefficiencies between exchanges.
Technology is the key tool in allowing market makers to reduce risk. This technology enables the market maker to adjust prices automatically to respond to the changes in market dynamics. When market makers reduce their risks it allows them to exploit inefficient markets so that customers can share in more competitive pricing. I.e. the lower the risk to the market maker, the more efficient the market is for all market participants.
GTL provides continuous automated two-way pricing, by quoting simultaneous bid/offer spreads on major derivatives exchanges globally. Through our continuous quotation activity, we facilitate greater price discovery and help maintain orderly, liquid, transparent markets for all of our trading customers.
The liquidity provided by GTL to these derivatives exchanges allows sophisticated and institutional investors to immediately transfer the risk often associated with financial instruments while saving money on trading costs.
As an electronic market maker, we do this by:
increasing liquidity; reducing market volatility; facilitating price discovery; and promoting competition among market centres and liquidity providers.
increasing liquidity;
