Generally speaking, the market maker system appears in the new third board market with relatively low liquidity and few counterparties. The market maker system is generally friendly to companies with low liquidity, small scale and high risk. This system can generally play these roles in the trading process: improving market liquidity and enhancing its market appeal. After all, the stock is a stagnant pool. Without speculation, it will gradually become a zombie stock. Stabilize the market so that it will not fluctuate greatly. We can often find that a weak trading company is easy to rise and fall when it sells several orders or pays the bill, so the introduction of market maker system can avoid this problem. Restrain price manipulation and correct market imbalance. This kind of operation is mainly to prevent the market from suddenly buying or selling in large quantities at a certain moment, which leads to liquidity tension. To sum up, this is the market maker system in financial markets.
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 in this trading mode, it can also be called an instruction-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, the market maker system is called the quotation-driven system. Market makers provide investors with bilateral quotations for betting transactions through the update of quotations, and guide the transaction price to change. Because this method is very similar to casino makers, some people are skeptical about the market maker system.
In financial theory, the market mechanism that implements the market maker system is called quotation-driven mechanism. Corresponding to this is the instruction-driven system, also known as the bidding trading system and the entrustment-driven system. It means that buyers and sellers send entrustment instructions to their respective brokers, and then the brokers send the instructions to the exchange. On the basis of summarizing all trading orders, the trading system of the exchange matches the transactions according to the principle of price priority and time priority, and completes the transactions. Under the order-driven system, the market price is driven by the buying and selling orders issued by investors and generated through bidding. The bidding matching method can be either the traditional public bidding method or the computer automatic matching method. The basic feature of the auction market is that the formation of securities trading prices is directly determined by buyers and sellers, and investors trade with other investors who are uncertain, rather than market makers. The flow of buying and selling orders is the fundamental driving force to promote market operation and price formation. At present, this trading system is adopted by two major domestic stock exchanges and three major futures exchanges.