Market Maker System On NEEQ’s Liquidity

National Equities Exchange and Quotations (NEEQ) was founded on January 16, 2006. Along with the listed scope expansion process and a series of system reform, NEEQ have got a rapid development. NEEQ is China’s important national over-the-counter market which provides a financing platform for small and medium enterprises. NEEQ plays an important role in all-round reform of capital market and the reform of the supply side. While the NEEQ’s scale expanded rapidly, the overall market quality is not high, especially the lack of liquidity in the market. The healthy liquidity can not only ensure the secondary market investors can buy and sell stocks, but guarantee the primary market of enterprises to obtain money. The persistent lack of liquidity will affect the basic function of NEEQ gradually, and will lower its position in the entire capital market. Market microstructure theory make up for the deficiency of the traditional research, started from the perspective of trading mechanism to study the price. The design of market structure must adapt to economic development and market characteristics. The structural design of the NEEQ in China will affect the quality of the market itself. In August 2014, the market maker system began to implement. This will change the NEEQ’s structure, which will affect the quality of the market. To measure the quality of the NEEQ from the perspective of liquidity can found whether market structure design is reasonable, thus contributing to the optimization of NEEQ mechanism. At the same time, this study can also provide effective reference to other financial markets structure design.This paper considers that the trading system of market maker system which based on the market microstructure theory will affect our country’s NEEQ’s liquidity. At first, this paper has analyzed about the present situation of the NEEQ’s liquidity and made further contrast to the stock market and the shares of contract transfer in liquidity. This comes to the conclusion that market-making system improves the liquidity. In this article, by comparing NEEQ with other market maker system, has found that market maker system is a traditional multivariate market maker system.With the development of the market in the future, the system of NEEQ will turns to a mixed trading system. In this paper, the market microstructure theory has been explained, and on this basis, through a multiphase model, the author found internal mechanism of the influence which the market maker system made. This paper chose the turnover rate and the bid-ask spread to inspect the agreement transfer market liquidity of the stock level, which through the Mann-Whitney U and K-S from the point of view of empirical validation. This paper found that the market maker system is superior to the contract transfer system, and has the promoting effect on the liquidity in the market. With day trading data of market through K-S inspection, This paper found the market-making system in the long term effectiveness is better than the short term. Finally, combining with the results of this article, the author gives her suggestions:continue to implement the market maker system in NEEQ; establish and perfect the system of layered; strengthen market supervision; increase the threshold of investors; clear turn plate mechanism policy suggestions.