| After China's economy have been experience 30 years of rapid growth, the economy growth rate began to fall. With the investment continuous decline in real estate and heavy industry, applying domestic investment to promote economic growth cannot get a well effect. Our country need to find new economic growth point. Because of insufficient consumer power in our country, we can only rely on technological progress to promote economic growth. Technological progress requires a lot of enterprise innovation. Medium small and micro-sized enterprise (MSME) will play an important role in technological progress because their quantity proportion is the largest in our country. However, MSME are often confronting financial constraints which will impede their smooth development. Credit tight of commercial bank and strict listing standards of main stock markets in China blocked the financial channel of MSME, while our country has huge investment demand because of excess savings and growth of income level. Investment demand cannot matching the financing needs of MSME for lack of specific channel. So the administrator urgently needed to build a stock market in order to solve the problem of financing difficulties of MSME.Against this back ground, the establishment and development of NEEQ well suit the current domestic economic situation. Many MSME are permitted to list on NEEQ for their equity financing. NEEQ has experience rapid growth since NEEQ expanded in 2013.NEEQ has been include in internal market in 2015. There are many differences between NEEQ and major stock market. Our major stock market implement verification system while NEEQ implement registration system, that means any enterprise can list on the NEEQ as long as they meet the conditions without considering approved by regulators. Low listing standards of NEEQ provide opportunities that MSME can exchange their stock in the market for financial needs.Although NEEQ maintain a relatively rapid pace of development, many problems are gradually appeared. Liquidity shortage is one of the most highlight the problem of NEEQ which can influence market transactions. Listing company quantity grew very fast since 2013, the listing companies increase from 356 to 5129 in last three years. Trading volume and turnover rate of NEEQ are lower even though they had more listing companies than A-share market has today. NEEQ total volume are 27.891 billion shares in 2015 while the volume of A-share market are 16.972576 trillion shares. What is more, NEEQ have many no trade companies. All of this suggests that NEEQ lack liquidity. Ample liquidity not only is the basis of healthy operation of the market, but also is the major premise on which refinancing is in effect for good. Market liquidity shortage will limit equity trading and reduce the confidence of investors that in turn affects MSME financing, over time, hinder NEEQ development. Therefore, solving the problem of insufficient liquidity is the most important thing.There are many factors that can influence market liquidity, the market trading system is one of the factors that closely linked to market liquidity. There are three kinds of stock trading system in the current equity market:negotiating transfer, market-maker system and competing system. Some studies has shown that these three systems providing incremental effect on stock liquidity. NEEQ implement the negotiating transfer at the beginning, NEEQ introduce market-maker system for stock trade on August 25th 2014.Since it is the first time that adopt market-maker system in our equity market, the operation of market-maker system in NEEQ attracts high attention of domestic and foreign markets.NEEQ market-maker system has been launched nearly one and a half year. It is the hot issue that whether market maker make a contribution to the liquidity of NEEQ. Some people believe that market maker improve the liquidity of stocks that is a good start to the promotion of market liquidity. The others hold that the liquidity function of market makers is not obvious because market-makers are not strictly to fulfill its obligations lead to pale trading still exists.The liquidity impact of market-maker system on NEEQ was studied in this paper, examine whether the market-maker system improve the liquidity of NEEQ. There are many studies in market liquidity influence of market-making system, but rarely refer to NEEQ. The innovation of this paper is that choose NEEQ as the research subject. This paper takes quantitative and qualitative research methods to conduct a study.This paper consists of five chapters. The first chapter is introduction that includes the research background and significance, previous research both home and abroad, this article innovation as well as drawbacks. Second chapter is market-making system carding, including the classification, operation and function of the market-maker system. Then state an overview of NEEQ and the operation of the market-maker system in NEEQ. The third chapter analyzes liquidity of NEEQ and draw a conclusion that there are four factors which affect the liquidity of NEEQ. The fourth chapter is the empirical analysis, choose three liquidity index to test whether market-making system raise the stock liquidity. The fifth chapter is about to summarizing the paper and providing some suggestions.There are conclusions after empirical analysis:First, NEEQ lack of liquidity overall and stocks have different liquidity situation, zombie companies that have no trade since listing more than half in NEEQ. Second, the liquidity of NEEQ has been improved after introducing market-making system. The company which implement market-maker system has better liquidity is better than that of the company implement negotiating transfer. Third, the empirical results show that the market maker system can improve stock liquidity to some extent. But for some individual stocks, stock liquidity before and after implement market-maker system has no significant change.According to the above conclusions, this paper puts forward some policy Suggestions for reference:First, improve the market-maker system. Regulators should relax control over market access to increasing the quantity of market makers, and strengthen supervision to monitor market maker behavior. Improving the market-maker system influence on the whole market liquidity as a result Second, from the perspective of listed companies, investors and market, in order to improve liquidity, listed companies should improve their profit-earning capacity to attract investors and market makers. NEEQ need to establish withdrawing mechanism for those underperformance company. Along with our NEEQ system unceasing development, regulators should reduce the threshold of investors. Improving the situation of imbalanced supply of and demand for NEEQ. The analysis of NEEQ liquidity problem cannot be isolated. Completing the market mechanism play an important role in improving liquidity of NEEQ, thus achieve the goal of the orderly operation and health development of NEEQ. |
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