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Jean-Paul
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Do marketmakers always quote a bid and ask simultaneously

I am trying to understand some MM (Market Maker) data that I have.

As a follow up to a question I read about MM:

How does a dealer (or market maker) earn the bid-ask spread on a stock?

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

Note:

  • 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?
Jean-Paul
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