Research On The Impact Of Market Makers On The Liquidity Of Commodity Futures

The market maker system is conducive to improving market liquidity,however,after the intervention of the system in China’s commodity futures market,the liquidity of some varieties has decreased rather than increased.Our study explores the effectiveness of the market maker system in China’s commodity futures market by selecting data from the commodity futures market from 2018-2022.Firstly,market making is considered as a policy intervention and the impact of market makers on commodity futures liquidity is investigated through the double difference method and robustness test is conducted using the double difference propensity score matching method;secondly,the transmission mechanism of market makers’ impact on liquidity is investigated through the double difference method;finally,the impact of market makers on liquidity is investigated through the magnitude of liquidity changes after market making in different commodity futures.The results of our study show that: first,the intervention of market makers has a positive impact on the liquidity of commodity futures;second,the number of market makers shows a significant positive correlation with the liquidity of commodity futures,and the competitive market maker system improves liquidity more than the monopolistic market maker system;third,one of the channels through which market makers improve the liquidity of commodity futures is that they affect the investor structure,and the proportion of individual investors increases and liquidity is improved;fourth,varieties with less liquidity before market making have more liquidity improvement after the intervention of market making system.The findings of our study provide a reference for regulating and improving the market-making system to promote the healthy development of China’s commodity futures market.