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> The NYSE requires designated market makers to buy and sell the securities they specialise in. They must do this even in violent market conditions This "manda
by AndrewBissell 13y ago
> The NYSE requires designated market makers to buy and sell the securities they specialise in. They must do this even in violent market conditions
This "mandate" tended to break down when tested by actual market panics. Bids dried up in 1987, and histories of the 1929 crash often mention clerks and floor runners who entered stink bids at $0.01 for stocks that had recently traded at $30 or $40, and got filled because the specialists had abandoned their posts.
Whether human or computer, market makers know better than to stand in front of a freight train.
- JumpCrisscross 13y agoMarket makers can declare "self help" in the event of technical difficulty. Exchange rules prohibit declaring self help to avoid adverse market conditions. In practice, self help declarations have a peculiar habit of cropping up in rough markets. Nevertheless, "guarantors of market liquidity" remains a rallying cry for traditional market makers.