What is a Market Maker?
A market maker is a participant in financial markets who provides liquidity by offering buy and sell quotes and trading when necessary to maintain market fluidity.
Conditions for Obtaining Market Maker Qualifications:
To qualify as a market maker, the following conditions must be met:
- Approval from Financial Regulatory Authorities: Market makers must be registered with the relevant financial regulatory authorities and comply with their regulations and requirements.
- Financial Strength: Market makers must have sufficient financial strength to bear certain risks and ensure liquidity.
- Technical Expertise: Market makers must possess advanced trading technology and systems to provide efficient trading platforms and liquidity.
- Risk Management Ability: Market makers must have effective risk management capabilities to ensure stability and sustainability in market fluctuations.
- Relevant Experience and Skills: Market makers must have the relevant experience and skills to identify market opportunities and risks, develop effective trading strategies, and make real-time trading decisions.
Rights of Market Makers:
- Information Advantage: Market makers can access records of all buy and sell orders from traders, allowing them to promptly understand market supply and demand.
- Earning Spread Profits: Market makers earn profits from the spread by providing buy and sell quotes.
- Priority in Financing and Securities Lending: To maintain market liquidity, market makers have a legitimate, effective, low-cost financing channel for priority borrowing.
- Right to Short Sell under Certain Conditions: To maintain trading continuity when most investors are buying, market makers can have the right to engage in short selling under certain conditions.
Obligations of Market Makers:
- Providing Quotes: Market makers are obliged to provide fair and transparent quotes and must not manipulate market prices.
- Ensuring Market Liquidity: Market makers must ensure market liquidity, strive to provide ample liquidity for traders, and avoid sharp market price fluctuations.
- Monitoring the Market: Market makers must closely monitor market changes and adjust their trading strategies and quotes in a timely manner to adapt to changes in market supply and demand.
