7. Markets and Participants Flashcards
Explain the role of a price-taker?
They principally deal off other market participants prices, or leave orders for these participants to execute. They request the price, and pay away the spread.
Which London Exchange still has floor trading, and what is it commonly called?
The London Metals Exchange (LME) - open outcry trading.
Explain the role of market makers?
They are market participants who quote both buy and sell prices for an instrument or commodity.
In OTC markets, market makers are called what?
Price-makers
How does a price-maker / market-maker seek to make a profit?
From the spread between their bid offer quotes.
A market that relies on market-makers for its price, is known as what?
A price driven market
The part of the market that is made up of price-makers is known as what?
Sell side
Firms that trade securities and derivatives for their own accounts, or their clients accounts are referred to as what?
Buy side
In contrast to a price-driven market, exchanges that operate a system whereby orders are matched is called what?
An order driven market
