About Market Maker
The market maker is an institution registered with B3, which undertakes to maintain bid and ask offers regularly and continuously during the trading session, promoting the liquidity in securities and derivatives, facilitating trading and mitigating artificial movements in prices.
Market makers can be hired in 2 ways:
- Hired by issuer: the security issuer, in this case stocks or funds, has the option of having a direct contract with institutions already authorized by B3 as market makers.
- Appointed by B3: B3 has several programs with the aim of further promoting liquidity and increasing the number of institutions operating in securities that are already has a market maker Appointed by issuer and ensuring that there are institutions operating in securities/products in which there is no market maker hired by issuer, for example derivative contracts for.
In both cases, B3 offers fee discount as a form of incentive, reducing its operating costs. The benefits rules are at the discretion of the rules of the program, set out in circular letters.
The market maker's offers compete on equal terms with other offers in the market, with the trades following the criteria of best price and chronological order of registration.
Activity
Market makers must act daily respecting the performance parameters (minimum quantity, maximum spread, and percentage of acting in the trading session).
If the market presents atypical behavior, with fluctuations outside the regular patterns (resulting from some economic, catastrophic event or even some totally unexpected positive fact that changes the price of the paper too much), the market maker may have, depending on B3 decision, its parameters changed or being released from its obligations during the trading session.
Selection process
Participants interested in any market maker program must first be registered as a market maker at B3. After this registration, the participant can be chosen by an issuer to act as a contracted market maker or can be accredited in any of the programs published and managed by B3. More information about requirements and how to register can be found at: ACCREDITATIONS
Activity parameter definition
The market maker must comply with obligations, such as minimum quantity, spread and percentage of action in the trading session.
The minimum quantity refers to the minimum quantity of the securities/derivative that the market maker must offer on both the buy and sell sides.
The prices of the market maker's buy and sell offers must respect a maximum range (usually called spread), which is defined according to each securities/derivative.
Market makers must comply with the conditions mentioned above during a specific period of the regular trading session, which period may also vary from product to product.
These clauses are defined by the issuer in the case of contracting by the issuer and by B3 in the case of Autonomous programs. These activity parameters vary from product to product and are defined based on specifics product/market conditions. The parameters are found in: Programs – Listed
Regulation
The market maker activity is regulated by CVM instruction nº 133 of june 10, 2022 and by the rules for accreditation of the market maker in the markets administered by B3.
