Research On The Influence Of Market Maker System To China Foreign Exchange Market

Foreign exchange market is not only the realization vehicle of freely convertible currency, regulating supply and demand of foreign exchange and forming the foreign exchange rate of market, but also the main platform to implement risk management of foreign exchange rate and fiscal policies collocation. As an important part of the foreign exchange system, trading system has got more and more focus.In the past, China's foreign exchange market used a single auction trading system. Despite in the early establishment period of the foreign exchange market, auction trading system on the foreign exchange market in China had played a positive role. But with the development of the foreign exchange market, the drawbacks of this trading system began to show, lack of market liquidity, trading was not active. In addition, central bank was playing the role of "the final buyer",so that RMB had to suffer the growing pressure of appreciation,and the independence and flexibility of monetary policy have also been extremely limited.At the beginning of 2006, the market maker system was introduced comprehensively to the inter-bank foreign exchange market in our country. So was the quote-driven mechanism by market makers. The introduction of market maker system makes the floating exchange rate more flexible, and the liquidity of interbank foreign exchange market has also been improved.Firstly, this thesis introduces the relevant basic theories of the market maker in three different levels:the microstructure of foreign exchange market, the trading systems of foreign exchange market and operating mechanism of the market maker system, constructing the theoretical basis in order to do more deeply research. Then, does some research on the background and current situation of the foreign exchange market maker system. Finally, this thesis analyzes the quality of China foreign exchange market before and after implementation of foreign exchange market maker by econometrics method and conclude that the liquidity and market efficiency have been significantly improved, while the RMB exchange rate has became more flexible. Because of lacking of appropriate experience to follow, in the implementation of market maker system, there are inevitable emergence of some shortcomings and deficiencies. The paper puts forward the suggestions on the problems appearing.