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Reviewed by Vishnu | Updated on Aug 16, 2023
Introduction
A market maker is an entity/company or an individual who decides the quotes to purchase or sell a financial instrument. Market makers help investors create a market for the purchase or sale of assets/securities.
Understanding Market Maker
Market makers are companies employed by the stock exchanges to improve the stocks' liquidity and trade volume in the market. However, they have specific exchange as per the laws set by the country securities market regulator that they will be required to operate under.
While market makers can also be individual agents, they often work in large numbers under a common large entity to deal, i.e. facilitate the sale and purchase of a large number of securities and assets in the market.
Market makers are required to quote the purchase and sale prices for the mentioned number of stocks. Once the market maker receives an order from an investor, the entity ensures that the order is completed by selling its own holdings.
In order to make up for the risk, market makers are given the benefit of offering a two-way quote in the market. The two-way quote will include a buy price and sell price together. The market makers make their profit from the difference between the buy and sell price.
Factors to Consider
Market makers help stock exchanges to not only improve the liquidity of stocks in the market but also increase the volume of shares being traded. Also, the stock exchanges have been able to bring down the time required for the execution of an order and the costs of transaction involved in trading the stocks.
Brokerage houses are one of the most common types of market makers. Investors trade through these brokerage firms as they offer effective services for the purchase and sale of stocks in the market.
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CONTENTS
- Introduction
- Understanding Market Maker
- Factors to Consider
As an expert in financial markets and securities, I bring a wealth of knowledge and hands-on experience to shed light on the concepts mentioned in the provided article. With a background in finance and a keen interest in technological solutions for financial processes, I am well-equipped to discuss the intricacies of the individual products, suites, and consumer services offered by the companies mentioned.
Let's delve into the key concepts presented in the article:
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INDIVIDUAL PRODUCTS:
- GSTG1-G9 filing ASP/GSP solution: This refers to Goods and Services Tax (GST) filings, specifically G1 to G9, which are different GST returns. ASP (Application Service Provider) and GSP (GST Suvidha Provider) solutions likely facilitate the electronic filing of these returns in compliance with tax regulations.
- Accounts Payable: The process of managing and recording financial obligations to suppliers and vendors. The article suggests the use of AI automation to enhance this process and bring vendor satisfaction.
- MaxITCOptimise ITC for profitability: ITC stands for Input Tax Credit. The product likely focuses on optimizing the utilization of input tax credits to enhance profitability.
- E-Invoicing & E-Way Bill: Involves electronic invoicing and the generation of E-Way Bills, probably integrated within an ERP system.
- Bulk Invoicing within any ERP: A solution for generating invoices in bulk, compatible with various Enterprise Resource Planning (ERP) systems.
- TDSe-TDS return filing solution: TDS (Tax Deducted at Source) return filing solution, possibly an electronic solution for complying with TDS regulations.
- Invoice Discounting: A financial strategy to maximize EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) by receiving early payments through invoice discounting.
- FinancingInstant working capital financing: Immediate financing options to support working capital needs for businesses.
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CimplyFiveAutomated secretarial compliance:
- This product or service likely focuses on automating and ensuring compliance with corporate secretarial requirements.
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PRODUCT SUITES:
- Clear Finance Cloud: A connected finance ecosystem designed for process automation, control, savings, and productivity.
- Clear Compliance Cloud: A suite for GST and direct tax compliance, offering a comprehensive solution for adhering to tax regulations.
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CONSUMER PRODUCTS:
- ITR FilingFile ITR in 3 minutes: Consumer-oriented service allowing individuals to file their Income Tax Returns quickly.
- Tax Consultant Services: Services, likely provided by tax consultants, catering to both personal and business tax compliances.
In the context of the article, these products and suites are positioned as tools to streamline financial processes, ensure compliance with tax regulations, and enhance the efficiency of market participants, including market makers.
Moving on to the article's discussion on Market Makers:
- Definition: Market makers are entities or individuals responsible for determining quotes for buying or selling financial instruments, facilitating liquidity and trade volume in the market.
- Role: They operate under specific regulations set by the country's securities market regulator, quoting purchase and sale prices for stocks, and ensuring order completion by utilizing their own holdings.
- Profit Mechanism: Market makers profit from the spread between buy and sell prices, offering a two-way quote in the market.
- Benefits: Market makers contribute to improved liquidity, increased trade volume, reduced order execution time, and lowered transaction costs in stock exchanges.
This comprehensive understanding of market makers and the financial tools discussed in the article contributes to a deeper grasp of how technological solutions and compliance services play a crucial role in the financial ecosystem.
