Third Market Maker

A third-party securities dealer that is ready and willing to buy or sell stocks listed on exchanges at publicly quoted prices. Third market makers add liquidity to financial markets by facilitating buy and sell orders even if there isn't a buyer or seller immediately available for the other side of the transaction. Third market makers make a profit from their roles as intermediaries by buying low and selling high. They also place trades for brokers on exchanges of which that broker is not a member.

A broker also facilitates the buying and selling of securities, but he or she accomplishes this task by directly matching up buy and sell orders. A third market maker might act as a buyer when an investor wants to sell, but he or she just wants to make a small, short-term profit from buying a security at a favorable price and selling it to another investor at a higher price. Third market makers sometimes pay brokers a small fee of a cent or two per share to direct orders their way. Sometimes brokers and third market makers are one in the same.