Banks are market makers/traders who operate in the market by buying securities from, or selling securities to investors, agents, or other banks. Banks make profits from the bid-offer spread – the difference between the purchase price of a security and the sale price of the same security.
The key difference between market makers and traders is that market makers publicize the securities prices at which they are willing to trade, while traders may be representing clients' orders and negotiating terms with market makers or trading for their own account and risk. Traders may decide to trade only in certain securities, or not to trade at the price at which a potential counterparty is willing to trade.
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