How does market makers prevent against adverse selection?

Discussion in 'Order Execution' started by beefcaketrade, Dec 11, 2013.

  1. Maverick74

    Maverick74

    Right in that way we are ALL market makers. I put out offers by appt as well. :)

    My comments were geared towards the idea that any bank is stupid enough to tie up obscene amounts of cash to engage in a business with no edge by making two way markets in GOOG. LOL.
     
    #21     Dec 13, 2013
  2. newwurldmn

    newwurldmn

    Banks make two way markets all the time.
    They do it in stocks. They do it in treasuries. They do it in CDS. They do it in lots of products.

    Some even have proper desks that deal with the exchanges (Barclays, Goldman, citi)

    Typical conversation (in case you never traded this way):

    Customer: where do you make 100k goog
    Bank: 955 at 956
    Customer: i buy 956.

    Bank then proceeds to do better in the market.

    LOL.
     
    #22     Dec 14, 2013