The role of a market maker is to enhance liquidity, add depth to the order book and minimize volatility, contributing to better overall market quality. The market maker achieves this by ensuring that there is a continuous two-sided market with a reasonable spread for their stock(s) of responsibility by posting bids and offers as necessary. Market makers also commit to a guaranteed minimum fill at the bid or offer for eligible orders, and also provides for automated execution of odd lot orders. All issues posted for trading on the CSE are available to be assigned to an interested market maker.
The CSE Appointed Market Maker
- Provides a two-sided market on their securities of responsibility. A spread goal is set at the time of the application.
- Provides superior liquidity to the retail trading community with automated odd-lot execution and a guaranteed minimum fill facility.
- Adds to market quality by addressing order imbalances and maintaining a reasonable bid/offer spread
- Reports trading irregularities to the CSE and IIROC to ensure an orderly trading environment.
CSE market makers are expected to adhere to their committed performance metrics. The CSE monitors market maker performance on the following criteria:
- Spread - Measures the reasonableness of the spread
- Presence - Measures market maker's contribution to the order book depth
- Volatility - Measures market maker's influence on overall quote stability
How Securities Are Allocated
The CSE awards market making assignments on the following basis:
- Dealers prominence in a given sector
- Dealers commitment to offer a competitive two-sided market
- Dealer's ability to meet with the commitments established in the application
- Specific request from an issuer