FROM the small investors' perspective, a market maker is a seemingly faceless but fraught individual who buys and sells shares on the request of their broker.
But although market makers may not be readily visible to the man in the street, their role is evident in every transaction.
Simply defined as traders operating on a short-term view, market makers actually buy and sell the shares for clients, and it is for this reason the small investor may want to lend an ear.
A private individual is unlikely to buy a share directly from a market maker. The usual course is to use a broker, who will be remunerated for his or her services through commissions.
These services, among other things, include implementing the transaction and often offering advice on the shares.
While the broker will turn to the analyst for the information on which shares to buy, the broker's point of contact for transacting the deal is the market maker.
The two can either work in the same institution, such as that of a securities house, or separately.