From Nasdaq: 2025-05-01 18:05:00

Fragmentation in the US market adds competition for venues and costs for traders, but recent studies suggest it may reduce competition for quotes. Traders setting the NBBO are impacted the most by increasing fragmentation, leading to unfair economics of price setting and data use. Market makers play a crucial role by setting NBBO prices, capturing spreads, and tightening spreads in a competitive market. Market makers profit from capturing spreads, not from price movements, which incentivizes them to continuously participate in the market. Charts illustrate how market makers improve bids and offers to capture spread and benefit other traders.



Read more at Nasdaq: Who Deserves to Capture Spread?