What is the role of a Liquidity Provider?
As the Trading System and Clearing & Settlement System Framework, released in January 2009 explains, a Liquidity Provider is to strive to: (1) quote bid and ask prices for the assigned issue; and (2) quote bid and ask prices equivalent to existing bid and ask prices for the assigned issue, within a scope deemed appropriate by the trading participant in consideration of trading circumstances such as prices and from a perspective of ensuring orderly closing of trades. The Exchange does not intend to set specific numerical standards (for spreads, hours, volumes, etc.). We do intend to require that the Liquidity Provider commit itself to the Exchange in writing that it will strive to ensure orderly distribution for each issue assigned to it.
