What is the main reason for the emergence of the market maker system

The market maker system is a market trading system, which is operated by a legal person with a certain strength and reputation as a market maker, constantly providing investors with buying and selling, and accepting investors' buying and selling requirements according to the ** they provide, trading with investors with their own funds and funds, so as to provide immediacy and liquidity for the market, and achieve certain profits through the bid-ask spread. To put it simply: quote **, and can press this **** or sell.

Its development history is as follows:

Our current domestic trading is a bidding trading system - investors through the network, the trading order is transmitted to the exchange, the exchange's computer host according to the principle of time priority, priority priority, the trading order is matched into a transaction, the formation of a continuous transaction. According to the formation mechanism of ** under this trading mode, it can also be called the order-driven system. In the era when there were no computers in foreign countries 100 years ago, it was through traders in the trading pool, in the form of open outcry to match buy and sell orders.

One obvious problem is that traders are much less efficient at processing orders than computers, and in order to be able 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 quote driven system by which the market maker provides investors with bilateral buying and selling transactions for VAM transactions, and guides the change of transactions through the update of the market. Since this method is very similar to that of a casino bookmaker, some people are skeptical of the market maker system.

The market dealer system is a market trading system in which a legal person with a certain strength and reputation acts as a market maker.

Continuously provide investors with trading **, and accept investors' trading requirements according to the ** provided by them, with their own funds.

and** Trade with investors, thus providing immediacy and liquidity to the market and achieving a certain profit through the bid-ask spread. To put it simply: quote **, and can press this **** or sell.

Legal basis: Guidelines for Market Makers in the Interbank Foreign Exchange Market.

Article 2 The term "market maker in the interbank foreign exchange market" mentioned in the "Guidelines" refers to the member of the interbank foreign exchange market who undertakes the obligation to continuously provide buying and selling to members when conducting RMB and foreign currency transactions in China's interbank foreign exchange market.

Article 3 Market makers in the interbank foreign exchange market can make changes in spot, forward, and swap terms according to their own market-making capabilities.

Options and other foreign exchange markets carry out market making.

Article 4 Market makers in the interbank foreign exchange market enjoy the following rights in accordance with the law:

1) Appropriately expand the limit range of comprehensive positions for foreign exchange settlement and sales, and implement more flexible position management;

3) Enjoy access to the People's Bank of China.

hereinafter referred to as the People's Bank of China) to apply for the qualification of foreign exchange primary dealers;

4) Policy support for innovative business in the interbank foreign exchange market.

Article 5 Market makers in the interbank foreign exchange market shall perform the following obligations in accordance with the law:

1) During the specified trading hours, the two-way buying and selling of RMB against major trading currencies shall be continuously provided in the interbank foreign exchange market, and the price shall be valid and tradable**;

2) The interbank foreign exchange market shall not exceed the fluctuation range of the exchange rate of the interbank foreign exchange market as stipulated by the People's Bank of China;

3) Abide by the relevant self-discipline norms of the self-discipline mechanism of the foreign exchange market, play a leading role in the market in regulating transactions in the foreign exchange market, trade honestly, and do not use illegal or other improper means to engage in false transactions and manipulate the market**;

4) Comply with the regulations and requirements for the management of comprehensive positions in foreign exchange settlement and sales;

5) Actively guide customers to establish a neutral awareness of exchange rate risk, and shall not be in marketing.

mislead or induce customer expectations;

6) In accordance with the State Administration of Foreign Exchange.

hereinafter referred to as the State Administration of Foreign Exchange) requires timely reporting on the operation and market-making of the foreign exchange market and to the People's Bank of China.

The market maker system, also known as the market maker system or market maker system, is a relatively popular and widely recognized market trading system in the international mature market. In layman's terms, the so-called market maker system refers to the fact that under a certain regulatory system, the brokerage holds the inventory of certain ** or bonds, and promises to maintain the two-way trading transactions of these ** and bonds, and these brokerages who maintain two-way trading transactions are market makers.

The market maker system has a history of more than 30 years in the developed market, and its role in the market has been recognized by the world: the market maker system has the function of activating the market and stabilizing the market, relying on its open, orderly and competitive driving mechanism to ensure the standardization and efficiency of the market, which is the inevitable product of the development of the market to a certain stage, and is an effective means to improve market liquidity and stabilize market operation and standardize the development of the market.

Specifically, the market maker system has the following three functions:

1. Take the market. When there is excessive speculation, market makers strive to maintain the stability of the stock price and reduce the bubble component of the market by operating in the opposite direction of other investors in the market.

2. Make a market. When it is too quiet, market makers artificially buy and sell in the market to activate the market and drive sentiment and return the stock price to its investment value.

3. Market supervision. While the market maker exercises its rights and fulfills its obligations, it monitors changes in the market through the market maker's business activities, so as to detect anomalies in time and correct them in time. In the emerging market, this is a useful attempt to maintain a reasonable distance from the market and counteract the inertia of the impact of the behavior.

A market maker (MM) is a company or individual who actively conducts a market on both sides of the market, providing a bid and ask price (known as the asking price) and the size of the market for each. For example, a market maker in XYZ might offer USD, 100x500. This means that they bid (they will buy) 100 shares in USD and 500 shares in USD (they will**).

Other market participants may then buy from MM in USD (raise) or bid to them in USD (winning bid). Market makers provide liquidity and depth to the market and profit from the difference in bid-ask spreads.

Market makers can also trade for their own accounts, which is known as primary trading. A market maker is an individual market participant or member firm of an exchange that also buys and sells ** for their own accounts, ** as shown in their exchange trading system, and the main goal is to profit from the bid-ask spread, which is the amount by which the selling price exceeds the ** price of an asset in the market. The most common type of market maker is a brokerage firm, which provides investors with buying and selling solutions to maintain liquidity in the financial markets.

Market makers are compensated for the risk of holding an asset because they may see a decrease in value after buying from the seller and before giving it to the buyer.

Many market makers are usually brokerage firms that provide trading services to investors to maintain liquidity in the financial markets. Market makers can also be individual traders (known as locals), but the vast majority of market makers work on behalf of large institutions due to the size required to boost buying and selling volumes. "Market making" indicates a willingness to buy or sell a defined group of companies** to broker-dealer firms that are members of that exchange.

Each market maker will display a number of buys and sells. As soon as the buyer's order is received, the market maker immediately sells his ** position from his own inventory to fulfill the order. Put simply, market making makes it easier for investors and traders to buy and sell, thus facilitating the smooth flow of financial markets.

Without market making, there may be undertrading and a decrease in overall investment activity.

The market maker must commit to continuing to buy (or bid) and (or require). 1 Market makers must also ** the amount and frequency they are willing to trade at that time it will be at the best bid and best bid (BBO) ****. Market makers must always adhere to these parameters during all market outlooks.

When the market becomes volatile or volatile, market makers must remain disciplined to continue to facilitate the smooth flow of trading.

It refers to the process of making a difference in the price of the legal person through the evaluation of the listed company. It helps to enhance the activity of the market, and it can also make the market run very smoothly, greatly promote the flow of funds, and can also enhance security and avoid a lot of risks.

It means that in the ** market, there will be some powerful people who will evaluate the bond, provide some ** to investors, and then complete the corresponding transaction, from which they can obtain a certain amount of economic income, so that people will be more rational when investing, and then it will not cause her serious economic losses.