I am trying to understand the Single Dealer Platform model that a lot of banks and prop shop are launching.

So I am not sure to understand really how a Single Dealer Platform works. From what I understand these SDP are used by other big institutions that don't want to trade on public exchanges because they are moving the market too much when buying a lot of shares.

But how does the owner of the SDP earns money? For example an SDP that provides liquidity for stocks listed on NYSE? Is the owner the one providing the liquidity for these stocks? So when there's a market order on that SDP, the owner is the one selling the shares or it just matches limit orders to market orders?

In the first case it would mean that the owner of the SDP always earn the spread and hence never loose money. In the second case I don't understand how the owner of the SDP earns money if it just matches limit orders of big institutions to market-order?

Also in the first situation the owner of the SDP needs to have a tons of liquidity to always being able to respond to the market order.



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