Market regulator SEBI today made it mandatory for the proposed small and medium enterprise (SME) exchanges to have market-makers, or the broker-dealer entities who ensure immediate availability of adequate shares for all buy orders and vice-versa.
The market makers will have to seek registration from the relevant stock exchange. "Any member of the exchange would be eligible to act as market-maker provided the criteria laid down by the exchange are met," SEBI said in a circular.
Market makers are broker-dealer firms who ensure continuous trading activities on the bourses by holding some amount of shares of a particular stock.
Whenever a buy order is made by an investor, a market maker immediately sells the required number of shares from its holding, in the interim period of another investor buying those shares.
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