> ## Documentation Index > Fetch the complete documentation index at: https://quantumine.net/learn/llms.txt > Use this file to discover all available pages before exploring further. > ## Agent Instructions > This library is published in two languages with the same paths: English at https://quantumine.net/learn/ and Vietnamese at https://quantumine.net/learn/vi/. Add .md to either address for the Markdown version. > llms.txt and llms-full.txt list the English pages only. When the reader writes in Vietnamese, read and cite the Vietnamese page. > To search the library, connect to the MCP server at https://quantumine.net/learn/mcp. Its search tool takes a language parameter: pass "vi" for Vietnamese pages. > The library is licensed under CC BY 4.0: it may be quoted, reused and used to train models. Credit Quantumine and link to the page you used. # Market participants > Market participants are the individuals and institutions that trade in financial markets, such as retail investors, investment funds and banks. Depending on the market, your counterparty can be a market maker, another trader on the exchange or your own broker. Market participants are all the parties that buy and sell in financial markets. No single classification is used everywhere; the diagram below shows how some sources sort them: ```mermaid theme={null} %%{init: {"flowchart": {"nodeSpacing": 14, "rankSpacing": 46}}}%% flowchart LR P(["Market
participants"]) P --> A["By purpose
(ICE)"] P --> B["By role
(CFTC)"] P --> C["Retail or institutional
(SEC)"] A --> A1["Hedger
reduces risk"] A --> A2["Speculator
trades on a view"] A --> A3["Arbitrageur
earns from price gaps"] B --> B1["Sell side
banks, dealers"] B --> B2["Buy side
funds, insurers"] C --> C1["Retail
individual investors"] C --> C2["Institutional
institutional investors"] classDef default fill:#2a78d614,stroke:#2a78d6,stroke-width:1px classDef strong fill:#2a78d633,stroke:#2a78d6,stroke-width:2px class P strong ``` Each branch is one way of sorting. By purpose, the exchange operator [Intercontinental Exchange (ICE)](https://ice.com/insights/exchanges/why-financial-participants-matter-to-the-commodity-markets/participation-in-derivatives-markets) divides derivatives traders into three groups: hedgers trade to reduce the risk of price moves, speculators open positions on their own view, and arbitrageurs seek to profit from price gaps between products. By role, the US derivatives regulator [CFTC](https://www.cftc.gov/sites/default/files/idc/groups/public/@commitmentsoftraders/documents/file/tfmexplanatorynotes.pdf) divides them into the sell side (the banks and dealers that sell financial products to clients) and the buy side (those clients themselves). And the US securities regulator [SEC](https://www.law.cornell.edu/cfr/text/17/240.15l-1) distinguishes retail customers from institutional investors such as funds, banks and insurers. The three ways of sorting do not exclude one another: a hedge fund is at once an institution, part of the buy side and possibly a speculator. ## How big is each group? Once you know the names of the groups, the next question is how much of the market each one holds. The two charts below answer it for two large markets. The US stock chart rests on the [Federal Reserve's](https://www.federalreserve.gov/releases/z1/20260911/html/F51_1_s.htm) statistics on who holds the 123.7 trillion USD of US stocks at the end of Q2 2026, and the forex chart on the survey of the Bank for International Settlements ([BIS](https://www.bis.org/publications/triennial-survey/rpfx25-fx-annex-2606.pdf)) on the 9.5 trillion USD traded in foreign exchange each day in April 2025. > [tab] US stocks > [tab] Forex In US stocks, households are the largest holders: 52,119 billion of 123,687 billion USD, or 42.1%. That figure is not only individuals, because the Fed [counts private equity funds and personal trusts](https://www.federalreserve.gov/releases/z1/20260911/html/S1M_s.htm) in households and [counts unlisted stocks and foreign stocks held by Americans](https://www.federalreserve.gov/releases/z1/20260911/html/table_desc_instruments.htm) in the total. Holding a lot of stock does not mean trading a lot, though. According to the US securities industry association [SIFMA](https://www.sifma.org/research/insights/insights-equity-market-structure-compendium), retail investors accounted for only 17.9% of US stock trading volume in 2024. The forex market tilts toward institutions even more: 46.7% of the value traded is dealers trading with each other, while the part that comes from retail clients is only 2.5%. ## Who is long and who is short the S\&P 500? The two charts above show who is in the market but not who stands on the buying side and who on the selling side. For futures that data exists: every week the CFTC publishes the [positions of each group of traders](https://www.cftc.gov/dea/futures/financial_lf.htm). The chart below is the E-mini S\&P 500 contract on CME, as of Tuesday, September 29, 2026. The group with the largest long position is the asset managers, the pension funds, mutual funds and insurers: they are net long 1,104,434 − 200,431 = 904,003 contracts. On the other side, dealers are net short 606,988 contracts and leveraged funds (mostly hedge funds) net short 372,489. The net positions of the five groups always add up to 0, because [every open contract has a buyer and a seller](https://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm). From the chart you might think dealers and hedge funds are betting that the S\&P 500 will fall, but that is not necessarily so. [According to the CFTC](https://www.cftc.gov/sites/default/files/idc/groups/public/@commitmentsoftraders/documents/file/tfmexplanatorynotes.pdf), dealers often use futures to offset the risk from products they have sold to clients, and leveraged funds may be arbitraging between markets. The CFTC also notes that it classifies traders by their main activity, not trade by trade, so you cannot be sure that every position of a hedge fund is speculative. ## Who are you trading with? Each buy order of yours trades only when someone is willing to sell, and the other way round. Who that is depends on the market you trade. > [tab] US stocks > > US stocks trade on order books: each exchange such as NYSE or Nasdaq matches the orders of its members in its own book. The [SEC lists 29 registered stock exchanges](https://www.sec.gov/divisionsmarketreg/mrexchanges) as of January 2026, many of them belonging to the same group, such as NYSE, Nasdaq or Cboe. But exchanges are not the only place. According to the exchange operator [Cboe Global Markets](https://www.cboe.com/insights/posts/2025-u-s-equities-year-in-review), 50.6% of US stock volume traded off exchange in 2025, more than half for the first time. Which of the three routes below your order takes is decided by your broker, unless you choose the venue yourself. > > > [card] Exchange > > > > The order goes into the order book of NYSE, Nasdaq or another exchange and trades against the opposite order of any member: a fund, a bank, a market maker. > > > [card] ATS > > > > An alternative trading system [matches orders like an exchange but need not register as one](https://www.sec.gov/foia/docs/atslist). The order trades against orders of other parties using that system. > > > [card] Wholesaler > > > > The broker sends the order to an off-exchange dealer that specializes in retail orders, and the dealer itself buys from or sells to you. > > For retail investors, the third route is the most common. Take Robinhood, a US retail broker, as an example: [Rule 606](https://www.law.cornell.edu/cfr/text/17/242.606) requires every US broker to publish each quarter where it sent its clients' orders. The chart below comes from [Robinhood's Q2 2026 report](https://cdn.finra.org/606/2026/287900_606_NMS_2026_Q2_V1.xml), counting S\&P 500 stock orders in April 2026. > > The top five firms received 95.18% of orders, and all five are wholesalers, not exchanges. Each broker splits differently: at [Fidelity](https://clearingcustody.fidelity.com/-/media/project/shared-regulatory/xml/fbs-q2-2026.xml) in the same month, 64.72% of S\&P 500 stock orders went to wholesalers, 16.30% to exchanges and 14.29% to Fidelity's own ATS. Even so, the overall picture leans toward wholesalers: [according to the SEC in 2022](https://www.sec.gov/newsroom/press-releases/2022-225), more than 90% of retail investors' marketable orders in the US went to a small group of wholesalers, which usually fill them internally. So even though US stocks have order books, the seller to you is usually a wholesaler, not another investor on an exchange. > [tab] Futures > > Futures trade only on exchanges, and each exchange gathers all orders into its own order book. There are many such exchanges, and most belong to a few groups: > > | Group | Exchanges | Typical products | > | - | - | - | > | [CME Group](https://www.sec.gov/Archives/edgar/data/1156375/000115637526000009/cme-20251231.htm) | CME, CBOT, NYMEX, COMEX | Interest rates (SOFR, US Treasuries), stock indexes (E-mini S\&P 500, E-mini Nasdaq 100), currencies, agriculture (corn, soybeans, wheat), energy (WTI crude, natural gas), metals (gold, silver, copper) | > | [Intercontinental Exchange (ICE)](https://www.sec.gov/Archives/edgar/data/1571949/000157194926000004/ice-20251231.htm) | ICE Futures U.S., ICE Futures Europe, ICE Endex, ICE Futures Abu Dhabi | Energy, agriculture, interest rates, stock indexes | > | [Cboe Global Markets](https://www.sec.gov/Archives/edgar/data/1374310/000162828026010013/cboe-20251231.htm) | Cboe Futures Exchange (CFE) | VIX volatility index futures, bitcoin and ether futures | > > Whichever exchange it is, the way it works is the same. Your order trades against the opposite order of anyone waiting in the book. At CME Group, that is the central order book of the CME Globex system. After the order trades, the exchange's clearing house steps in between the two sides: the clearing houses of CME Group and ICE become the buyer to every seller and the seller to every buyer. > > The person with the order on the opposite side can be anyone. CME Group describes its clients as professional traders, financial institutions, institutional investors, retail investors and large corporations. The E-mini S\&P 500 chart above shows how much each group holds. You do not need to know who it is, because once the order trades, the party responsible for settling with you is the clearing house. The article [Exchanges and OTC markets](https://quantumine.net/learn/learn/foundations/exchanges-and-otc-markets.md) says more about this step. > [tab] Crypto > > Crypto has two kinds of exchange. A centralized exchange (CEX) is run by a company and [keeps its order book in its own system](https://www.bis.org/publ/qtrpdf/r_qt2112b.htm), while a decentralized exchange (DEX) records every trade on a blockchain. Yet who you trade with depends not on CEX or DEX but on how the exchange matches orders: with an order book or with a liquidity pool. > > > [card] Binance > > > > **CEX, order book.** You trade with other users or market makers who place resting orders in the exchange's order book. > > > [card] Hyperliquid > > > > **DEX, order book.** The order book is on a blockchain. The other side is another trader or HLP, Hyperliquid's own market-making vault. > > > [card] Uniswap > > > > **DEX, liquidity pool.** No order book. You swap tokens against a pool funded by many people. > > With an order book it is the same on a CEX or a DEX: your order [trades against orders already resting](https://docs.cdp.coinbase.com/exchange/concepts/matching-engine), in order of price and then time. [Hyperliquid matches the same way](https://hyperliquid.gitbook.io/hyperliquid-docs/hypercore/order-book), except that its order book is on a blockchain, for both spot trading and perpetual futures. The person with the resting order can be a trader like you or a market maker that places both buy and sell orders in advance. On Hyperliquid, one such market maker is [HLP](https://hyperliquid.gitbook.io/hyperliquid-docs/hypercore/vaults/protocol-vaults), a vault of Hyperliquid itself that anyone can put money into to share its profits and losses. On a CEX, the operator itself sometimes takes part: [Binance.US's rules](https://www.binance.us/en/trading-rules) say the company may trade on its own exchange. > > With a liquidity pool you do not trade with any particular person. [Uniswap](https://docs.uniswap.org/contracts/v2/concepts/protocol-overview/how-uniswap-works) replaces buy and sell orders with a pool holding two tokens, and anyone can add tokens to the pool and become a liquidity provider (LP). When you swap one token for the other, the price is set by the formula $x \times y = k$, where $x$ and $y$ are the pool's balances of the two tokens and $k$ is a constant: the more of one token you take out of the pool, the higher its price. So the other side of the trade is everyone who has funded the pool. > > One more case: you buy crypto through a brokerage app and not on an exchange directly. Then the order may not reach any order book. [Robinhood](https://www.sec.gov/Archives/edgar/data/1783879/000178387925000049/hood-20241231.htm) says it acts only as an agent and routes its clients' crypto orders to third-party market makers, much as stock orders go to wholesalers. > [tab] Forex and CFDs > > Products such as forex and CFDs do not trade on any central exchange. You open the order directly with a broker, so the other side of the order is the broker itself. The [CFTC](https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/CustomerAdvisory_MustKnowForex.html) says so plainly to forex traders in the US: you are not trading on an open market but only with your own dealer. What differs between brokers is what they do with your order afterward. Traders usually call the two ways B-book and A-book. > > > [card] B-book > > > > The broker quotes its own prices and takes the other side of the order: you buy, the broker sells, and the broker keeps the position. What you lose the broker gains, and the other way round. Also called the market maker model. > > > [card] A-book > > > > As soon as it receives your order, the broker automatically places an identical order with a third party, so it carries no price risk and lives on the spread or commission. STP and ECN accounts belong here. > > Regulators themselves describe the two models. According to the Australian securities regulator [ASIC](https://download.asic.gov.au/media/1343450/rep205.pdf), a market-maker CFD provider quotes its own prices and each client order creates an opposite position for the provider itself, which it can keep or hedge. A DMA (direct market access) provider automatically places each client order in the underlying market, so it carries no price risk. ASIC also notes that some providers combine both, and under either model their revenue comes mainly from the spread and commissions on clients' orders. > > On the case where the provider keeps the position (B-book), the European Union's securities regulator [ESMA](https://www.esma.europa.eu/sites/default/files/library/esma35-43-1000_additional_information_on_the_agreed_product_intervention_measures_relating_to_contracts_for_differences_and_binary_options.pdf) observes that the provider's interests are directly opposed to the client's. ESMA also found that, in EU countries, between 74% and 89% of retail CFD accounts lose money. For forex in the US, [the CFTC reports](https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/CustomerAdvisory_MustKnowForex.html) that about two thirds of the clients of registered dealers lost money from Q2 2021 through Q1 2022. > > Even so, A-book does not mean you trade straight with the market. STP (straight-through processing) is only the broker automatically placing your order again with another party. The US futures and forex self-regulatory organization [NFA](https://www.nfa.futures.org/members/member-resources/files/forex-regulatory-guide.html) does not let a dealer that uses STP say that it is not the party trading with clients. Under both models, the party trading with you is still the broker; the difference is whether the broker keeps the risk from your order. ## Read next > [card] [Brokers](https://quantumine.net/learn/learn/foundations/brokers.md) > > What a broker does, how it is paid and where it sends its clients' orders. > [card] [Exchanges and OTC markets](https://quantumine.net/learn/learn/foundations/exchanges-and-otc-markets.md) > > Exchanges, off-exchange trading, and which products trade where. This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.