Virtu Financial is a US market maker: a firm that stands ready to buy and to sell at any moment. It lost money on just one of 1,238 trading days from 2009 to 2013. It disclosed that record when it listed its shares in 2014.
A market maker earns a tiny amount on each of a very large number of trades. It loses when prices move before it can sell on what it has bought. Here is how the business works, from a single currency quote to Virtu's accounts for 2025.
What does a market maker do? A market maker is a firm that quotes a price to buy and a price to sell the same thing at the same time. It stands ready to trade at either price. When it buys at one price and sells at the other, it keeps the gap.
The buying price is the bid. The selling price is the ask. The gap between them is the spread.
Market makers earn the spread. Some exchanges also pay them a small rebate for each quote they post. In US share trading, some market makers pay trading apps to send them their customers' orders.
Virtu Financial, a US market maker, earned $2.44 billion of trading income in 2025, 67% of its revenue. Its profit after all costs and tax was $912.3 million.
What a market maker is: bid, ask and spread
A market maker posts two prices at once:
The bid is the price at which it will buy.
The ask (also called the offer) is the price at which it will sell. It is always higher than the bid.
The spread is the ask minus the bid.
A seller who needs to trade now sells at the bid. A buyer who needs to trade now buys at the ask. The market maker sits in the middle. It earns the spread when it does both.
How market makers make money
Market makers have three main sources of income:
The spread. Virtu's 2014 prospectus says it earns "small amounts of money" on the difference between what buyers will pay and what sellers will accept.
Exchange rebates. Some US stock exchanges pay a rebate to the firm that posts a quote. They charge a fee to the trader who takes it. In an example in a 2015 memo from staff of the Securities and Exchange Commission (SEC), an exchange pays $0.002 a share to post a quote. It charges $0.003 a share to take one.
Interest and dividends on the cash and securities the firm holds.
They also face two main costs. The first is fees paid to exchanges and to clearing firms, which settle trades so that cash and securities change hands. The second is payment for order flow. In US retail share trading, some market makers, known as wholesalers, pay trading apps to send them their customers' orders.
The Financial Industry Regulatory Authority (FINRA) is the US industry regulator for securities firms. It says a trading app must not let these payments "interfere with" getting its customers the best price. Under the SEC's Rule 606, the app must report these payments each quarter.
A worked example: spread earned vs loss on euros held
EUR/USD is the price of one euro in US dollars. We explain how it moves in How Exchange Rates Work.
The quotes below are illustrative, built around a real rate. The Federal Reserve publishes a daily EUR/USD rate at noon in New York. On 16 September 2026 it was 1.1538. The last of its four decimal places, 0.0001, is called a pip.
Say the market maker quotes 1.1537 to buy euros and 1.1539 to sell them. That is a spread of 2 pips.
A client sells €10 million to the market maker at 1.1537. The market maker pays $11,537,000.
Another client buys €10 million at 1.1539. The market maker receives $11,539,000.
The market maker ends up holding nothing. It keeps $2,000.
One buy plus one matching sell is called a round trip. Here each round trip of €10 million earns $2,000.
Now suppose the second client never arrives. The market maker still holds €10 million bought at 1.1537. At noon on 17 September, the rate was 1.1479.
Source: FRED (DEXUSEU); YX Insights
The chart compares the spread with the loss on the euros held. The euro fell 58 pips. On €10 million that is a loss of $58,000. It equals the spread from 29 round trips.
Even an ordinary day's move is far bigger than the spread. We worked out the median daily move in EUR/USD from the Federal Reserve's daily rates, as published on FRED, the St. Louis Fed's database. In 2026, up to 25 September, it was 22 pips. If that goes the wrong way on €10 million, it is a $22,000 loss, or the spread from 11 round trips.
How a market maker limits inventory risk
The position a market maker holds between trades is its inventory. The risk that its price moves is inventory risk. A market maker manages it in three ways:
Moving its quotes. Holding too many euros, it lowers both bid and ask. That attracts buyers and puts off sellers.
Hedging. It sells euros elsewhere, to another bank or in the futures market. We explain futures in What Is a Futures Contract?
Limits. It caps how much it will hold, so one move cannot sink the day.
What goes wrong: better-informed clients, fast markets and pulled quotes
Better-informed clients. Trading with someone who knows more is called adverse selection. A client who sells just before bad news leaves the market maker holding a falling asset. The spread earned on other trades has to cover those losses.
Fast markets. When prices jump, a market maker can lose on everything it holds before it can adjust its quotes.
Pulled quotes. On 6 May 2010, major US stock indices were already down over 4% on the day. They then "plummeted a further 5-6% in a matter of minutes before rebounding almost as quickly". A joint report by staff of the SEC and the Commodity Futures Trading Commission (CFTC) found that some market makers widened their spreads, while "a significant number withdrew completely". Some trades went through at a penny or less. Over 20,000 trades in more than 300 securities were later cancelled.
Virtu Financial's revenue and costs in 2025
Virtu Financial files its accounts with the SEC. Its market making covers shares, bonds, currencies, commodities and crypto. It also runs an Execution Services business, which trades on clients' behalf.
Virtu Financial, year to 31 December 2025 | $ million |
|---|---|
Trading income | 2,436.7 |
Commissions and technology services | 617.0 |
Interest and dividends received | 508.8 |
Other income | 69.6 |
Total revenue | 3,632.1 |
Exchange and clearing fees, plus payment for order flow | −769.8 |
Interest and dividends paid | −647.4 |
Staff costs | −528.1 |
Other running costs | −592.5 |
Tax | −182.1 |
Net income | 912.3 |
Source: Virtu Financial Form 10-K for 2025; YX Insights
In 2025, Virtu's total revenue was $3.63 billion. Trading income, its gains from buying and selling after trading losses, was $2.44 billion of it, or 67%. Commissions and technology services added $617.0 million.
Fees to exchanges and clearing firms, plus payment for order flow, cost $769.8 million. Interest and dividends paid cost $647.4 million. Staff cost $528.1 million. Other running costs came to $592.5 million. Tax took $182.1 million. That left net income of $912.3 million.
Virtu Financial's trading income by year, 2018 to 2025
Source: Virtu Financial Form 10-K filings (SEC XBRL); YX Insights
Over the years shown, trading income was highest in 2020, at $2.49 billion. It was lowest in 2019, at $0.91 billion. In 2025 it was $2.44 billion, close to the peak. Virtu's annual report gives one reason for the swings: "increases in market volatility can cause bid/ask spreads to temporarily widen". Wider spreads mean more income per trade.
Virtu also gave its own reason for the record in the opening. Its 2014 prospectus credits "our real-time risk management strategy and technology" for having "only one losing trading day" in 1,238.
What market makers mean for your own trades
The spread is on your trading app. The buy price shown for a share is higher than the sell price. Buying then selling straight away costs that gap. We cover what a share gives its owner in What Is a Stock?
A market order fills at the best price available now. A buy fills at the ask, while a sell fills at the bid.
A limit order sets the worst price you will accept. It protects you when the spread widens, but it may not fill.
A market maker quotes both sides of a market and earns the spread between them. It loses when prices move against what it holds, which is why it keeps its inventory small and its quotes moving.
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