1. What is the market maker system?
The market maker system is a trading system in the financial market. Its model is that a legal person with certain strength and credibility acts as a market maker, and constantly provides the buying and selling prices to the market in the process of making the market, thus making the market clinch a deal and have liquidity. This trading method does not have to wait for the appearance of the counterparty. At the same time, a certain profit can be realized through the bid-ask spread. Generally speaking, the market maker system appears in the new third board market with low liquidity and few counterparties.
Second, the market maker system is usually beneficial to companies with low liquidity, small scale and high risk. The system can usually play the following roles in the transaction process:
1 Improve market liquidity and enhance market attractiveness. After all, if no one is speculating in stocks, it will be a pool of stagnant water. Will gradually become a zombie stock.
Stabilize the market so that it will not fluctuate greatly. We often find that a company with a small trading volume is easy to rise and fall when it sells more than one order or buys more than one order, so the introduction of market maker system can avoid this problem.
3. Restrain price manipulation and correct market imbalance. This operation is mainly to prevent the market from suddenly buying or selling in large quantities at a certain moment, causing liquidity tension.
Three, China's current securities and futures trading adopts the bidding trading system, and investors transmit trading instructions to the exchange through the network. The computer mainframe of the exchange matches the trading orders according to the principle of time priority and price priority to form a continuous trading price. According to the price formation mechanism under this trading mode, it can also be called order-driven system. 100 years ago, when there were no computers abroad, traders in the trading pool issued trading orders in the form of public propaganda.
One obvious problem is that traders are far less efficient in processing instructions than computers. In order to serve investors, OTC and market maker trading systems naturally came into being.
Corresponding to the order-driven system, the market maker system is a system in which market makers provide investors with bilateral quotations for buying and selling, conduct gambling transactions, and guide the transaction price changes by updating the quotations, so it is called the quotation-driven system. Because this method is very similar to casino makers, some people are skeptical about the market maker system.