Market Maker — market animator

Definition

Market Maker (market animator) is a financial institution that commits to continuously posting buy and sell orders for a given financial instrument. It provides liquidity — thanks to them, you can always buy or sell shares.

How does a market maker work?

A market maker simultaneously:

• Buys at the bid price (buy offer)
• Sells at the ask price (sell offer)

The difference between bid and ask is the spread — and that's the main source of the animator's earnings.

Example: Market maker quotes XYZ stock:

• Bid: 99.50 PLN (will buy from you)
• Ask: 100.50 PLN (will sell to you)
• Spread: 1.00 PLN

For each pair of transactions (buy + sell) they earn ~1 PLN per share.

Why are market makers needed?

Without market animators:

• No liquidity — you want to sell shares, but no one is buying
• Wide spreads — the difference between buy and sell price would be huge
• High volatility — without continuous quotes, prices jump chaotically

Market makers stabilize the market and lower transaction costs for all participants.

Market makers on GPW

On the Warsaw Stock Exchange, market animators include:

• Brokerage houses (e.g., DM BOŚ, Trigon)
• Investment banks
• Specialized trading firms

GPW requires animators to maintain spreads below a certain level and minimum order volumes.

Market maker vs regular trader

Controversies

• Conflict of interest — market maker sees client orders and can profit from this
• Payment for Order Flow (PFOF) — brokers like Robinhood sell client orders to market makers (e.g., Citadel). In the EU, PFOF is banned from 2026
• Flash crashes — when market makers withdraw in panic, liquidity disappears and prices fall avalanche-style

How Freenance can help

Freenance helps understand the transaction costs of your portfolio. You can see how much you pay on spreads and commissions, which is especially important with frequent trading of less liquid instruments.

👉 Monitor transaction costs with Freenance — freenance.io