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> it's not always the case that there's a buyer there right at the time

This hits the nail on the head. For a trade to happen, counterparties need to meet in price and in time. A market place is useless if there is nobody around to buy or sell at the same time you do.

The core service market makers provide is not liquidity. It's immediacy: they offer (put up) liquidity in order to capture trades, but the value proposition for other traders - and the exchanges! - is that there is someone to take the other side of a trade when a non-MM entity wants to buy or sell instruments.

It took me a long time to understand what the difference is. And in order to make sure that there is sufficient liquidity in place, exchanges set up both contractual requirements and incentive structures for their market makers.




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