The market maker system is a kind of market trading system, in which a legal person with certain strength and credibility acts as a market maker, constantly provides investors with buying and selling prices, accepts investors' buying and selling requirements according to the offered prices, and trades with investors with its own funds and securities, thus providing immediacy and liquidity for the market and realizing certain profits through the bid-ask spread.
According to the competitive characteristics, there are two types of market maker system: monopoly market maker system and competitive market maker system.
The Development History of Market Maker System
At present, China's securities and futures trading adopts the bidding trading system-investors transmit trading orders to the exchange through the network, and the exchange computer host 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. In the era when there was no computer abroad 100 years ago, it was through the traders in the trading pool that the purchase and sale orders were matched by open bidding.
One obvious problem is that the efficiency of traders in processing orders is much lower than that of computers. In order to serve a large number of investors, OTC and market maker trading systems naturally came into being.
Corresponding to the order-driven system is the market maker system, which is called the quotation-driven system. Market makers provide investors with bilateral quotations for gambling transactions, and change the transaction price through the update of quotations. Because this method is very similar to casino makers, some people are skeptical about the market maker system.