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Designated Market Maker

Overview

Market Maker refers to a company that engages in two-sided markets quotes of a given security. The purpose of a Market Maker in a financial market is to keep up the functionality of the market by infusing liquidity. They do so by ensuring that the volume of trades is large enough such that trades can be executed in a seamless fashion. In the absence of a Market Maker, an investor who wants to sell a security, particularly an illiquid security, may lose value in the sale process, as the market may not have readily available buyers. The prices set by Market Makers are a reflection of demand and supply.

Market Makers have a contractual obligation under a Designated Market Maker [DMM] agreement to provide binding quotes (bid and/or offer prices) for certain securities during the trading day. DMMs are important for maintaining the structure of an exchange and to ensure smooth flow of orders.

PSX recognizes that DMM play an important role in providing liquidity to the market. Authorized Market Makers contribute to Pakistan’s financial market quality by providing improved liquidity and price efficiency. PSX Provides the trading platform / Regulates Trading and Market Making activities of DMM.

Overview

Market Maker refers to a company that engages in two-sided markets quotes of a given security. The purpose of a Market Maker in a financial market is to keep up the functionality of the market by infusing liquidity. They do so by ensuring that the volume of trades is large enough such that trades can be executed in a seamless fashion. In the absence of a Market Maker, an investor who wants to sell a security, particularly an illiquid security, may lose value in the sale process, as the market may not have readily available buyers. The prices set by Market Makers are a reflection of demand and supply.

Market Makers have a contractual obligation under a Designated Market Maker [DMM] agreement to provide binding quotes (bid and/or offer prices) for certain securities during the trading day. DMMs are important for maintaining the structure of an exchange and to ensure smooth flow of orders.

PSX recognizes that DMM play an important role in providing liquidity to the market. Authorized Market Makers contribute to Pakistan’s financial market quality by providing improved liquidity and price efficiency. PSX Provides the trading platform / Regulates Trading and Market Making activities of DMM.