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The obligations and responsibilities of Market Makers in India

The Market Maker shall fulfil the following conditions to provide depth and continuity on this exchange: 

The Market Maker shall be required to provide a 2-way quote for 75% of the time in a day. The same shall 
be monitored by the stock exchange. Further, the Market Maker shall inform the exchange in advance for 
each and every black out period when the quotes are not being offered by the Market Maker.

The minimum depth of the quote shall be Rs.1,00,000/- . However, the investors with holdings of value 
less than Rs 1,00,000 shall be allowed to offer their holding to the Market Maker in that scrip provided that 
he sells his entire holding in that scrip in one lot along with a declaration to the effect to the selling broker. 

Execution of the order at the quoted price and quantity must be guaranteed by the Market Maker, for the 
quotes given by him. 

There would not be more than five Market Makers for a scrip. These would be selected on the basis 
of objective criteria to be evolved by the Exchange which would include capital adequacy, networth, 
infrastructure, minimum volume of business etc.

The Market Maker may compete with other Market Makers for better quotes to the investors;

Once registered as a Market Maker, he has to start providing quotes from the day of the listing / the day 
when designated as the Market Maker for the respective scrip and shall be subject to the guidelines laid 
down for market making by the exchange.

Once registered as a Market Maker, he has to act in that capacity for a period as mutually decided between 
the Merchant Banker and the Market Maker.

Further, the Market Maker shall be allowed to deregister by giving one month notice to the exchange, 
subject to above.

The Chinese stock markets have the strongest presence of market makers in the Asian region.  China has Market Makers for equity 
index products, currency products as well as commodities. There are three types of Market Makers in the China:

Primary Market 
Maker (PMM);

Market maker 
continuous quotes 
(CQMM); and

Market maker 
responding to quote 
request (QRMM).

The concept of market making has been there for the Asian Exchanges for a long time too. The 
concept of market making was first adopted In India by Over the Counter Exchange of India 
(OTCEI), a stock exchange that comprises of small and medium sized firms.