[mverwijs]

Yes they provide liquidity. But that is not the reason traders become market makers.

The liquidity is something that the exchanges want so they can provide better services to their other users / customers.

What the market makers get in return is some privileges on the exchange, such as favorable credit exempts or short sale treatments. This depends on the exchange.

But being a marketmaker, basically obliging to be able to quote a price on anything and everything, is regarded as much as a nuisance as it is a benefit.

[tptacek]

Liquidity reduces the cost of trading for everyone, which is something you can just empirically verify. What do we care what someone's motivation for doing it is? Presumably everyone's motivation in finance is to make money.

[mverwijs]

> Liquidity reduces the cost of trading for everyone,

Yes. And I do not see this as a boon. It reduces the cost of trading for traders at the expense of _everything_else_.

Eg: search for 'whack bully oil prices'.