What is a NYSE Designated Market Maker? Posted by Brenda Hamilton
One of the most important decisions for a company going public is to choose the right market for listing the company’s shares. This is true for initial public and direct public offerings. The New York Stock Exchange (“NYSE”) provides the opportunity to maximize liquidity, encourage market activity, and trade securities efficiently.
The NYSE and NYSE MKT offer innovative, high-speed technology enhanced by the commitment of capital from traders who are accountable to the company. This market structure provides price discovery at the open, the close, and during periods of volatility, including periods of market dislocation. For NYSE companies, Designated Market Makers (“DMMs”) add significant liquidity to the market, which is further enhanced by supplemental liquidity providers (“SLPs”) and floor brokers equipped with new, algorithmic trading tools. The judgement of the DMM and commitment of capital at the point of sale distinguishes the NYSE from other markets.
Designated market Makers – DMMs
Designated Market Makers are at the core of the NYSE and NYSE MKT markets. They act as a buffer against market volatility, increase liquidity, and fulfill an obligation to maintain a fair and orderly market. The NYSE provides both a physical auction convened by DMMs and a completely automated auction. NYSE automated auction includes algorithmic quotes from Designated Market Makers and other market makers.
DMMs are among the most involved trading firms on the NYSE. The Designated Market Makers adhere to strict requirements to maintain an orderly market, quote at the National Best Bid and Offer (“NBBO”) and facilitate price discovery during openings, closings, and imbalances.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956 or by email at [email protected]. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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