What does the market maker agreement require regarding quotes during trading?

What does the market maker agreement require regarding quotes during trading?

• A. Provide binding quotes for certain securities during the trading day.
• B. Guarantee profits to market makers.
• C. Limit the number of quotes per hour.
• D. Publish a quarterly performance report.

Answer: (A)

The main idea is that market maker agreements require posting firm quotes for designated securities throughout the trading day. These quotes are binding, meaning the market maker must honor the prices (and sizes) when a counterparty wants to trade, for the period the quote remains valid. This standing quote obligation helps ensure liquidity and orderly markets because participants can rely on executable prices during trading hours. Profits aren’t guaranteed, there’s no typical limit on the number of quotes per hour, and there’s no requirement to publish a quarterly performance report as part of the quote duty.

The main idea is that market maker agreements require posting firm quotes for designated securities throughout the trading day. These quotes are binding, meaning the market maker must honor the prices (and sizes) when a counterparty wants to trade, for the period the quote remains valid. This standing quote obligation helps ensure liquidity and orderly markets because participants can rely on executable prices during trading hours. Profits aren’t guaranteed, there’s no typical limit on the number of quotes per hour, and there’s no requirement to publish a quarterly performance report as part of the quote duty.