Short answer: yes. Long answer: yes, but there are a few things you need to know first.
What Is Speedway?
In case you’re wondering, Speedway is a stock market software company that was founded in 1996 and is headquartered in London, UK. You can learn more about the company here:
- Website: www.spdwy.com
- Category: Software
- Ticker Symbol: (SPD)
- Overview: The Evolution of Online Trading
Why Is Speedway Important?
You may be wondering why you should care about whether or not Speedway is a publicly traded company (PTC). Here’s why:
As the economy shifted to a more online/digital sphere, businesses that provide platforms for people to buy and sell securities have become more popular. One of these companies is Overstock.com, which is an online store that allows you to browse a wide range of products (mostly from smaller companies) and make purchases with the help of a dedicated Overstock.com sales staff. Another company in this space is E*TRADE, which provides a similar service but focuses on specific types of stocks (e.g., small caps, biotech) and commodities (e.g., gold).
There are also a few important things you need to know before trading any stock with the help of these types of platforms. For example, if you’re going to use Overstock or E*TRADE, you need to make sure you’re a resident in the United States (you can find out if you’re eligible to trade US stocks here: www.ftc.gov/usreg/register). Moreover, you need to decide whether or not you want to use a credit card for the transaction (most brokers offer free trades but charge fees for most other types of transactions).
As you can imagine, processing thousands of stock trades a day is a lot for a broker or exchange to handle. For this reason, many companies have developed technologies to help speed up the process. The two most popular ones are called market makers and liquidity providers.
Market Makers And Liquidity Providers
As the name suggests, a market maker is someone who essentially stands in the middle of a market and makes it more liquid. Consider this quote from a recent Wall Street Journal article:
“For example, most companies that trade publicly held securities don’t want to deal with the extra paperwork involved in selling their stock direct to investors. They prefer to engage with professional market makers who do that work for them. That can make the purchasing of stock much simpler for smaller investors.”
A market maker is typically compensated by the stock exchange for providing liquidity – that is, making sure there’s always someone (or someones) willing to buy and sell stock at a certain price. In most cases, market makers make a small profit off each trade they facilitate. However, over the counter (OTC) brokers usually have an additional fee for executing trades for their customers.
Why Are Market Makers Important?
From the Wall Street Journal article:
“The primary function of a market maker is to provide liquidity to the market at large. They do this by keeping track of what stock prices are currently available for purchase and sale and constantly adjusting their offers accordingly. When a buyer and seller both agree on a price, the market maker then matches the money and accounts for the trade. This process of matching buyers and sellers and providing liquidity to the market is what makes market makers indispensable to the OTC market. Moreover, because they have a direct impact on the overall liquidity of a stock, investors must always keep an eye on the market makers of their choice.”
“OTC traders, especially those who use specialized software, usually rely on market makers to provide the liquidity their platforms need to work efficiently. Without these specialists, some other type of market mechanism would be necessary to maintain a free-market system because, let’s face facts, no one wants to deal with the paperwork involved in executing a trade themselves.”
Why Is Liquidity Important?
What is liquidity? According to Investopedia, liquidity is “the state of being readily available or easily convertible into cash.” In other words, liquidity measures the value of ownership in an investment vehicle. In the context of the stock market, liquidity is important because it measures the willingness of buyers and sellers to engage in a trade at a certain price. As the previous section mentioned, without liquidity, the market may become illiquid, which prevents any serious investment from taking place. In general, the greater the liquidity, the greater the potential for investment.
Is There Any Relation Between Market Makers And Liquidity Providers?
Yes. As mentioned above, market makers facilitate trades by providing liquidity to the market at large. In turn, liquidity providers provide that liquidity by taking on trades that come their way. Because the two are so highly correlated, it usually doesn’t make much sense to look at them individually. Moreover, many platforms allow for direct comparison between market makers and liquidity providers, which makes comparing the two even simpler. Here’s a list of the top ten best stock market comparison sites, in case you’re looking for inspiration.
Are Market Makers And Liquidity Providers Important To Speed And Ease Trades?
Yes. As the economy shifted to a largely digital sphere, companies that facilitate trades in securities have seen an uptick in business. As a result, many market makers and liquidity providers have developed software platforms that make comparing offers and searching for liquidity extremely convenient for OTC traders. In most cases, these platforms display all the relevant information a trader needs in one comprehensive view. Moreover, the interfaces are usually very user-friendly, which means even less training is usually necessary for new users.
With the right platform, all the necessary information is usually readily available to a trader. Moreover, because they have a direct impact on the liquidity of a stock, market makers and liquidity providers are usually the first point of contact for new users interested in entering the market. This is important because it means these professionals have an understanding of the needs and constraints of a prospective trader. From there, it’s usually a matter of presenting the right offer, at the right time, for the right price.