Market makers are licensed by and incentivized by the exchange. They will usually have cheaper or no transaction costs, be given order priority over other marke

Market makers are licensed by and incentivized by the exchange. They will usually have cheaper or no transaction costs, be given order priority over other market participants, have more relaxed rules on quote display times, or any other combination of advantages over all other market participants. In return they are required to take both sides of the market (eg: buy when everyone else is selling) and respond to a minimum percentage of quotes (eg: trade when no one else wants to). For the exchange the advantage is that they provide a minimum level of liquidity at all times which is what attracts traders to the exchange.