Market Making
Market Making is a key function in financial markets where specialized firms or professionals help buyers and sellers trade stocks, bonds, or other investments smoothly. Think of market makers like store owners who always keep products on their shelves - they maintain a supply of financial assets, quote both buying and selling prices, and ensure investors can trade when they want to. They earn money from the small difference between buying and selling prices (called the spread). This activity is essential for keeping financial markets running efficiently, just like stores are essential for consumers to easily buy products.
Examples in Resumes
Managed Market Making operations for equity derivatives with $50M daily volume
Led Market Making desk for corporate bonds, improving liquidity by 30%
Developed automated Market Making strategies for ETF trading
Typical job title: "Market Makers"
Also try searching for:
Where to Find Market Makers
Professional Organizations
Job Boards
Professional Networks
Example Interview Questions
Senior Level Questions
Q: How would you handle a situation where market volatility suddenly increases?
Expected Answer: Should discuss risk management strategies, adjusting pricing models, managing position sizes, and communication with team members and stakeholders. Should emphasize protecting the firm while maintaining market presence.
Q: Describe how you would build and manage a market making team.
Expected Answer: Should cover team structure, risk controls, training programs, performance monitoring, and how to maintain profitability while ensuring regulatory compliance and good market practices.
Mid Level Questions
Q: How do you determine appropriate bid-ask spreads?
Expected Answer: Should explain considering factors like market volatility, trading volume, competition, and risk management. Should mention balancing profitability with maintaining competitive quotes.
Q: What factors do you consider when setting position limits?
Expected Answer: Should discuss market conditions, product liquidity, company risk tolerance, and overall market exposure. Should demonstrate understanding of risk management principles.
Junior Level Questions
Q: What is the basic role of a market maker?
Expected Answer: Should explain providing liquidity by quoting both buy and sell prices, managing inventory, and facilitating smooth market operation. Should understand basic concepts of bid-ask spreads.
Q: How do market makers manage their inventory?
Expected Answer: Should describe basic inventory management principles, risk limits, and hedging concepts. Should understand the importance of maintaining balanced positions.
Experience Level Indicators
Junior (0-2 years)
- Understanding of financial markets basics
- Knowledge of trading systems
- Basic risk management concepts
- Trading operations support
Mid (2-5 years)
- Active trading management
- Risk monitoring and control
- Market analysis
- Trading strategy implementation
Senior (5+ years)
- Trading desk management
- Advanced risk management
- Team leadership
- Strategy development
Red Flags to Watch For
- No understanding of basic market principles
- Poor risk awareness
- Lack of attention to detail
- Unable to explain trading concepts in simple terms
- No knowledge of regulatory requirements
Related Terms
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