How to Become a Market Maker

Stock exchanges are very complete and require a variety of brokers to function effectively and efficiently. Market makers are special types of stockbrokers that are responsible for facilitate the trading process by buying and selling shares when there are too many or too few available and quoting prices.

What does a market maker do?

A market maker is responsible for “making” the market for a certain stock. They hold a specific number of shares of stock in their inventory to be able to sell them to bidders. When the market maker holds a certain number of shares, they accept the associated risks. They compete for customer orders by quoting both purchasing and selling prices for a certain number of shares. Sometimes market makers match up buyers and sellers. Market makers work directly on the floor of the exchange and there is usually one market maker for every traded security or commodity.

What kind of training does a market maker need?

Market makers typically need at least a bachelor degree in finance, accounting, business, or other related field. Many have a Master of Business Administration degree to remain competitive in the field. Many prospective market makers complete internships to gain practical experience and possibly gain employment after graduation. May employers provide intense on the job training to enable new market makers to learn the specifics of the firm. Market makers must become Financial Industry Regulatory Authority (FINRA) registered representatives of their firm. The requirements include minimum experience and passing the Series 7 Examination. Most states also require the Series 63 or 66 Examination. Market makers must complete continuing education and regularly participate in seminars and conferences to maintain their licenses, stay up to date with new products and services, and stay abreast on advancements in the filed.

What are the prospects for a career as a market maker?

Employment of market makers is expected to grow about as fast as average for all professions, increasing 9% from 2008 to 2018 (1).

Job prospects are expected to be favorable with strong competition. Market makers with extensive experience and professional certifications will have the best job opportunities.

How much do market makers make?

As of January 2010, the average annual salary for market makers is $135,000; average annual market maker salaries vary greatly on location, employer, education, experience, and benefits (2).

A career as a market maker is an excellent choice for individuals with a strong interest in performing a variety of activities for the effective function of the stock market. Market makers must have excellent selling techniques and be able to analyze a large amount of numbers. A strong work ethic, desire to succeed, self-confidence, good persuasive skills, and determination are necessary characteristics. Market makers must have excellent communication and interpersonal skills. They must be able to effectively work as part of a team. They must also be able to work in stressful and demanding conditions.

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