Market Maker Spread
The difference between the price at which a market maker is willing to buy a security and the price at which the firm is willing to sell it (the difference between the bid and ask for a given security). Because each market maker can either buy or sell a stock at any given time, the spread represents the market maker's profit on each trade. Investopedia Says:
Market makers are limited in the size of spread they can offer. The bid/ask spread has a maximum size to prevent cheating and manipulation of stock prices. Related Terms:
Bid-Ask Spread
Broker-Dealer
Electronic Communication Network - ECN
Ghosting
Locked Market
Market Maker
Nasdaq
Quote Driven Market
Small Order Execution System - SOES |