I am trying to understand some MM (Market Maker) data that I have.
As a follow up to a question I read about MM:
And to this piece of information from Investopedia:
Market makers must maintain continuous two-sided quotes (bid and ask) within a predefined spread.
I am wondering the following:
Is a MM obliged to quote a bid and an ask price at the same time?
E.g. take a look at the following raw piece of MM data:
MMExchange, MMID, MMBid.Price, MMBid.Size, MMAsk.Price, MMAsk.Size Q, NSDQ, 2.25 6, 2.29, 19
Interpreting this data, I get the following:
MM Exchange : Q MID : NSDQ MM Bid Price: 2.25 MM Bid Size : 6 MM Ask Price: 2.29 MM Ask Size : 19
- Price is in dollars: so the displayed spread is
2.29 - 2.25 = $ 0.04
- Size means the number of shares that the MM is quoting for the given bid and ask (I believe it's quoted in thousands)
- I got the data from a reliable source (so I'm sure it's correct)
- I'm referring to Registered Market Makers here (so not private investors)
Now I have the following questions:
- Did the MM quote these bid and ask prices at the same time?
- Why is the MM (price) spread larger than the current bid and ask spread? (I also have that data: the price quote that exchanges send out)
- Does this mean that I can calculate the profit the MM is trying to make on this quote?