MMS and its opportunities in financial markets

Stocks are an investment opportunity and generate profits for a lot of people. This is a very popular type of investment today. In the stock market, there are a lot of terms that new players need to learn. Surely many people have seen the phrase MMS. So what is MMS in securities? Let’s learn about the definition and role of MMS through the creative investment channel Check it out!

MMs is an abbreviation of the English phrase Market Maker which means market maker. So what are MMs in stocks? This is a general term for individuals or organizations that hold a financial intermediary position and are willing to accept risks to promote trading in securities by holding large volumes. that type of security.

It is the market maker’s responsibility to satisfy investor demand for a given security. In the case when no member wants to buy and sell but the investor wants to buy or sell that type of stock, the market maker will stand out to perform the transactions. Through this intermediary stage, whenever an investor wants to buy a stock, there will be a source ready to sell to them and vice versa.

The presence of market makers will help to optimize the trading process and will make the transaction happen quickly. In addition to saving time for investors, it also helps them reduce liquidity risk and help them have more conditions to enter or leave a stock position in the easiest way.

MMS function in stock ?
After learning what MMS in securities is, we need to know more about its functions. Here are a few functions of MMs that new stock investors need to know.

Market Making Mechanism (MM)
When learning what MMS in securities is, we need to understand the market bidding mechanism. Most stock exchanges around the world will use the MM market maker. This mechanism will conduct bids when requested by investors and continuously bid.

Offer on request
The Stock Exchange will regulate the minimum volume and time and time for listing prices. Market makers will base on these regulations to bid when requested from investors.

The on-demand bidding will help investors reduce the pressure of having to bid continuously. However, it will have a disadvantage that investors will have to make an order to ask MMs to bid, which is quite inconvenient for them.

Continuous bid
This is the type where market makers conduct a two-way bid with two buy and sell orders either one way buy or sell. And the bidding will take place continuously throughout the trading session.

When MMs make continuous bids, they will have to comply with the regulations previously issued by the Exchange on trading volume, bid period, minimum duration, minimum required volume. conduct transactions…

Another function to know when understanding what is an MMS in securities is the liquidity mechanism. The rights and responsibilities of the liquidity mechanism are not as complicated as that of MM. The market maker under this mechanism only needs to meet the monthly and quarterly trading volume obligations registered with the exchange or the issuer.

Particularly for this activity, there will be evaluation periods on a monthly or yearly basis by the Stock Exchange. And the department will rely on these assessments to make decisions to reduce transaction fees or reward market makers that have done a good job of making the market.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

© 2022 - Theme by WPEnjoy · Powered by WordPress