Two-Sided Market

A market in which market makers (or specialists) are required to give both a firm bid and firm ask for each security in which they make a market. In other words, those making the market must be willing to both buy and sell at the prices they quote. Also known as two-way market.

Investopedia Says:
People mainly use this term in the context of the NASD requirement that Nasdaq market makers give both a firm bid and firm ask for each security in which they make a market. However, this term can also be applied in the bond market. For example, some broker-dealers make two-sided markets on larger, actively traded bonds and rarely make a two-sided market in inactively traded bonds. The theory is that this helps to enhance liquidity and market efficiency.

Related Links:
Learn about the systems that run the market. Topics include market makers, specialists, SuperDOT, ECNs, SOES, Level I, II, and III Access, and more. Electronic Trading Tutorial
Find out the various ways in which a broker can fill an order, which can affect costs. Understanding Order Execution
Find out the answers to all the questions you had about stock exchanges but were afraid to ask! Getting to Know Stock Exchanges

Market where a dealer is willing to quote both a bid and an asked price, or stands ready to make a market on both sides of a transaction, either as buyer or seller. This kind of market usually is found in the government securities market and the over-the-counter stock market, rather than the municipal bond market, which normally is a one-way market. Municipal securities tend to be less marketable than U.S. Treasury obligations, which actively are traded and have a strong secondary market. Some muni bond dealers, however, quote bid and asked prices on longer maturity term bond issues.