Comparative Studies On Competitive Quoting Obligation Of Market Maker

Theoretically speaking, Market maker indicates an independent legal entity whichhas adequate money and credit to be an authorized dealer, consistently quoting to thepublic bids and offers on certain securities, and receiving trading requests frominvestors on that price, and finally using its own money and securities to deal withothers. Market maker in China New Third board (NEEQ) means a securities companywhich is permitted by NEEQ Co.,Ltd in providing two sides quotations in NEEQ,and making transactions with investors within the quoting sizes.The legal system of Marker maker in NEEQ is similar to that of both AmericanNASDAQ and CHINA Taiwan’s, Especially in quotation system. All of theirobligations can be divided into three categories including quotation obligations,disclosure duties, fiduciary duties. Besides, the quoting obligation system of marketmaker can match the obligations’ system of “Obligatio” of continental legal system.There are several differences in concrete rules between China and The US, ChinaMainland and China Taiwan. Generally speaking, as a new revival, China mainlandhas much in common with China Taiwan in the market maker system than that of themature legal system of NASDAQ market maker. There are seven chapters in this paper. In Chapter1author defines the concept ofmarket maker, and delimits the scope of this concept to competitive market maker.Market maker hete is different from the Specialist.In Chapter2, author generalizes the theoretical basis of competitive market maker.Make sure that the Obligations of Debt, the Efficient Market Hypothesis, GameTheory are the theoretical basis.Chapter3to Chapter5are about the competitive quoting obligations of marketmaker. In Chapter3author compares the actively quoting obligations of consistentlyquoting obligation, two-sides quoting obligation, the maximize spread obligation, thequoting sizes obligation, the minimum price change limit and so on. They are the coreobligation of market maker.In Chapter4author describes the duties of disclosure of the market maker.These duties can be divided into two parts, both duties of quotation disclosure andtransaction disclosure. They have a close relationship with the Efficient MarketHypothesis. Each duty of this part can affect the stock price, and they are important.In Chapter5author describes the fiduciary duty of market maker.The fiduciaryduty of this part can also be divided into two parts, both normal duties and specialduties. And opposite side of fiduciary duties are security fraud and securitymanipulation. Here, author invited correlated cases and materials in order to setsamples for the control of the future market maker in China NEEQ.In Chapter6Basing on the analysis of Chapter1to Chapter5,author givessuggestions on the perfection of market maker system in China NEEQ.Chapter7author gives a short end.From the perspective of rule in detail, the US NASDAQ market maker rules aremore advanced in the marketization, and more suitable for the adequate competitionamong market makers and other participants. China mainland and China Taiwanprefer the suitable distribution of market maker obligations，keeping reasonablecompetition and reasonable profit for market makers.The competitive quoting obligation of Market maker in china is more flexible than that in the US, including limitation on quotation price、minimum、normaltrading unit and prohibition on inter market maker trading. What’s more, exempt fromtwo sides quotations obligations and flexible transaction report. Generally speaking,Chinese market maker system is more suitable for market maker to earn profit.Transaction report is a important for the market participants to trade(orquote).The time limit of circulation of US NASDAQ stock market transaction reportwas cut from90s to10s.It proves that the time limit is important. Chinese transactionreport is described that it would be reveled every day immediately, while to thequotation, the regulation says that it will be entered as soon as it is entered.The US NASDAQ Market Maker System has a significant meaning on today’sChinese NEEQ Marker Maker System. Basing on the big date, NEEQ market makersystem can be advanced and adjusted suitably.