Dr. Humam Al Qussi
Researcher – School of Law – University of Aleppo – Syria

Abstract:

The concept of Market Maker (MM) has caused many problems in regards to its definitions, method of operation, financial objectives, and the regulation strategy that the Kuwaiti Boursa (Boursa Kuwait) is seeking to achieve by MM in its trading system mechanism, allowing the existence of MM; which means giving the capacity to an authorized person to carry out trading for the purpose of finding a party in the exchange who is able to buy & sell via giving liquidity to the exchange.
The legal inspection of MM usually includes a set of obligations which guarantees the MM’s intervention in the trading mechanism in order to inject an additional liquidity into the securities exchange through analyzing these obligations on “Competed” & “Designated” MM, which shows the ability & effectiveness of these systems to rebalance the supply & demand of the exchange, which is the fundamental purpose of MM, and the evaluation criterion for how well the Kuwait Boursa system is in line with NASDAQ and New York, which is what we aim to address.
Therefore, this reflects the effect of the MM obligations on the balance between the supply and demand of the exchange in order to specify the most suitable MM system in regards to the MM’s role and obligations through the descriptive, analytical, deductive & comparative methods to compare between Kuwaiti Boursa & NASDAQ (Competed MM) in comparison with NYSE (Designated MM).
Finally, we conclude with the necessity to impose the obligation of “Exchange Rebalancing” on MM via competing environment, and measuring the minimum or maximum amount of MM’s liquidity obligations by volumes rather than sum.

Keywords: Trading Transactions, Market Price, Quoting, Bid/Ask Spreads, Liquidity.

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