What Is a ‘Market Maker’ and How Does It Differ from an HFT Arbitrageur?

A market maker provides liquidity by simultaneously placing both buy (bid) and sell (ask) limit orders. They profit from the bid-ask spread.

An HFT arbitrageur, in this context, is a 'taker' who exploits mispricing between markets or assets. While some HFT firms act as both, a pure arbitrageur seeks risk-free profit from price differences, whereas a market maker takes on inventory risk for the spread.

Arbitrage enhances efficiency; market making provides liquidity.