Comment on the following and support your answer with necessary reasons: The market makers infuse liquidity in securities that are not frequently traded on stock exchanges.

Market Making is a process whereby two way quotes are offered for the purpose of facilitating trading in respect of a certain scrip. The main advantage of market making is that it affords much-needed liquidity to the securities. It also increases the supply of scrips in the market and also triggers demand for the scrips in the market. Market Making is basically aimed to inculcate liquidity in securities that are not really frequented on stock exchanges. A market-maker usually is responsible for enhancing activity in a few chosen securities. In the process, the market-maker provides both a buy and a sell quote for his chosen securities. Market making is solely done to infuse liquidity to lesser traded shares. Typically, it is the market maker, who is responsible for enhancing the demand-supply situation in securities which is inclusive of stocks, futures and options (F&O). Market maker is typically an institution or a broker, who gets an incentive to recommend the securities to the investors and thereby creating a market for the lesser traded options. The market-maker provides both a buy and a sell quote for his chosen securities. He profits from the spread between buy and sell quotes. For example, if the market-maker gives a bid-ask quote of ₹505-₹500 (which means the market-maker will buy from the market at ₹500 and sell at ₹505), then the profit is ₹5. For illiquid securities, the profit spreads are usually higher (within a regulator-prescribed band) because of the higher risk taken by the market-maker. Market-makers are helpful as they are always ready to buy or sell as long as investors are willing to pay the price quoted by them.