Market Makers, Exchanges & Clearing Firms
Who quotes, who matches, and who holds and settles.
What is Market Makers, Exchanges & Clearing Firms?
Market makers are dealers that continuously quote bids and offers, providing liquidity. Exchanges match buyers and sellers; over-the-counter markets are dealer networks. An introducing broker-dealer handles the client relationship but passes execution, clearing, and custody to a clearing broker-dealer, which settles trades and holds customer assets.
Market Makers, Exchanges & Clearing Firms: a worked example
An independent firm's clients see its name on statements, but a large clearing firm holds their securities.
More terms in Retirement Plans, Accounts & Trading
IRA Rollovers vs. Transfers
60-day rollovers are limited to one a year; direct transfers are unlimited.
10% Early Withdrawal Penalty & Exceptions
Distributions before 59 1/2 cost 10% extra, unless an exception applies.
Solo 401(k)
A 401(k) for a self-employed owner with no employees other than a spouse.
Defined Benefit Plan
A pension promising a specific benefit; the employer bears the investment risk.
Defined Contribution Plan
An individual account plan whose payout depends on contributions and returns.
403(b) Plan
A salary-deferral plan for public schools and 501(c)(3) nonprofits.
457 Plan
Deferred compensation for state and local government employees.
SIMPLE IRA
A low-cost plan for employers with 100 or fewer employees.
All Retirement Plans, Accounts & Trading terms · Full glossary