Analysis On The Influence Of Marketmaker System On The Liquidity Of China's NEEQ Stocks

As an important part of China's multi-level capital market,National Equities Exchange and Quotations(NEEQ)has played an irreplaceable role in the financing process of SMEs.In recent years,more and more innovative and entrepreneurial enterprises have chosen NEEQ to list.The number of market-listed companies and their total market value have increased substantially.As of the end of December 2017,the new three boards already have 11,630 listed companies with a total market value of 4,940.456 billion yuan.However,unlike the ever-increasing market size,the liquidity of NEEQ has been criticized by investors.In order to improve this situation,on August 25,2014,the market introduced the market-maker system.At the initial stage of the implementation of the system,the enthusiasm of the enterprises for making the market has increased,the number of market-changing enterprises has increased rapidly,and the turnover rate has increased significantly which reached the highest level in history in 2015.However,in the past two years,the advantage of the market-maker system has been lost,the market size and trading conditions of the NEEQ are not optimistic.The market conditions have been dull,and even show a downward trend.On January 15,2018,the market introduced a collective bidding trading system,but in the short term,the market liquidity did not occur in the expected improvement.At this difficult time,it is necessary to examine the influence of the market-maker system on the liquidity of NEEQ,so as to consolidate and improve the trading system of NEEQ and improve liquidity level of the market.This paper first combs the literature on the three aspects of market liquidity,market-maker system and the implementation effect in China's securities market,laying the foundation for the research of this paper.Then based on the theoretical analysis of the market-maker system,NEEQ and the mechanism of the market-maker system,a large number of charts are used to demonstrate the overall liquidity of the New Third Board market and the liquidity conditions under different trading systems.Then in the empirical test part,the three dimensions of price fluctuations,turnover rate,and Amivest liquidity index were used to measure the liquidity changes in the 20 trading days before and after making a stock market.Not only that,this article also selected six stocks to conduct liquidity risk tests.The empirical results show that the liquidity of the market-transferred stocks is higher than the liquidity of the originally-transferred stocks and market-maker system has improved the liquidity of NEEQ.However,it cannot be ignored that there is still a large liquidity risk in NEEQ,which also shows that the introduction of collective bidding trading system is a general trend.Based on the research results,this paper proposes some policy recommendations such as improving the market maker trading system,lowering investor thresholds,raising the standards of listed companies,and improving the delisting system in the final part of the article,in order to enhance the liquidity of NEEQ.