Research On Market Maker System Development In China’s OTC Market

Market maker system has seen nearly50years in the securities markets of the developed countries. The usage of market maker system improved the liquidity of the OTC market, and played a significant role of market transaction creation, enlivening the market and market soundness protection.In China’s12th five-year plan, there is emphasize on the deepening the reform of the financial system. Following the proposal of "Building the OTC market, and gradually Forming the organic connection of all levels stock markets" in the11th five-year plan, it is further clarified to expand the pilot of the Agency Share Transfer System and accelerate the development of the OTC market. Recently, the SRC is about to build a national OTC market under the unified regulation. By far, China’s OTC market, mainly composed by the local Property Trading market, Agency Share Transfer system and Equity Trading market, prevalently has the problems of small size, low volume, illiquidity and opaque information and so on. The development of the market maker system has an important significance for promoting the sound development of China’s OTC market and building the multi-level capital market.The paper, based on the definition, function and theories of the market maker system, sorted out the development context of the traditional market maker system and explored the formation node of hybrid market maker system. Then the paper reviewed the development course of China’s OTC market, and analyzed the problems and the causes of OTC market maker system in China:not common usage of the market maker system, lack of sufficient and qualified market makers, difficulty to form reasonable market price, inadequacy of high quality institutional investors to participate, illegal operations, and ineffective supervision and other issues. The paper on the basis of analyzing the important meaning of China’s OTC market maker system, proposed the countermeasures to build China’s OTC market maker system, including:the introduction of relevant laws and regulations; cultivation of high quality market makers; proscriptions of the rights and obligations of market makers; reduction of market transaction costs, and the suggestions as normative assess to market makers, supervisions of market makers’behaviors, and establishment of market maker exit-mechanism to improve the market maker regulatory system.