Tech and speed are becoming the biggest barrier of entry. So many Chicago firms are toast or much less profitable these days... it's a winner-take-all where basically Citadel + Susquehanna are swallowing every traditional MM, on the listed side at least. Not a good business to be in anymore.
Benefits MM have vary from product to product and exchange. In options on most exchanges the is dark liquidity, but no no really dark polls As I mentioned in options three shops handle about 75% of the paper. The big are most of the dark liquidity and there is no TRF for options so 100% print on the exchange. Generally if the MM is on the NBBO they are entitled to 30 to 40% of the order. There transactions costs are higher than retail for some products if you factor in payment and technology costs. They can they get enormous leverage if they're self clearing. You 'll offer see better liquidity in maker/taker wher they get paid to provide markets. So let's call the first benefit Time and Place or what some people would consider being on a floor or have priority place if you are electronic remote. You also have a massive advantage of big data. You get to post quotes, but in listed options your lit quote and dark quote will usually be for vastly different size. Every listed option prints on an exchange. For stocks about 2/3 trade on exchanges and the rest trades dark and prints on the TRF. They both print and it has to be timely Block trades are worth a ton to MMs in both options and stock. So profitable that many exchanges have fee caps to attract flow. Caps exist in both stocks and options. Almost everything today trades on multiple venues. The biggest exception is SPX and VIX. The MM or stock specialist will be presented with a facilition trade- where an upstairs desk will bring a trade to the floor so as to facilitate the fill. The MM is entitled to a portion of that trade as well or they can bust it - aren't a ton of busted facilitation any more. A MM or Specialist may have to do an inter asker sweep to take out any better price before that block. Very little volume in stock is non-instutional and most of those are automated low touch. Algos and other instutions are most of the balance. In options 30 to 40% is retail,but on a notional basis that represents Sure they get picked off and make mistakes, but if the trading rights and listings have value there is still a reason to be a MM. Again the last stock specialist to change hand wen't for 1.4 billion