Research On Market Maker System Of New Third Board In China

The market maker system is a major trading system in the modern securities market,making an important contribution to market liquidity provision,market volatility stabilization and price discovery.Market maker trading system is adopted in the world’s major Stock Exchanges.Since the traditional competition market maker system was introduced into the New 3rd Board,great progress was made on the number of listed companies,trading volume and the number of investors.However,there still exist problems of the market maker system and New 3rd Board.And market generally believes that hybrid market maker system can effectively solve the problems of lacking liquidity and high volatility in China New 3rd Board.So,it is significant to analyses the problems of the market maker system and its optimization.The market maker system includes monopoly type,competition type,and hybrid type.Compare to the advanced OTC market,we discovered market maker access,offer rules and the rights and obligations in the New 3rd Board are unreasonable,it is necessary to solve these problems.We use qualitative and quantitative analysis on these market maker systems.In qualitative terms,these market maker systems of the pros and cons were compared,and combined with the situation of the New 3rd Board,analyses the applicability in our country.It concludes that hybrid type make better effect on solving the problems of lacking market maker and low market efficiency.In quantitative terms,based on the historical trading data of the NYSE,NASDAQ and the New 3rd Board,we found out that the hybrid type is superior to the monopoly type and the competition type on the aspect of volatility and liquidity.Based on the research and analysis,we put forward the following suggestions:firstly,to improve the market maker’s access conditions,improve the market maker’s access threshold;secondly,balance rights and obligations of market maker;thirdly,to improve the bidding rules;last but not the least,introduce the hybrid market maker trading system.The paper provides a constructive reference for the management of the market system in the New 3rd Board.