The China Securities Regulatory Commission (CSRC) has announced that it will test out market-making on Shanghai’s STAR Market stock exchange, in an attempt to increase liquidity, reports Reuters. Qualified brokerages can apply to act as market-makers on STAR, in a pilot scheme that will be steadily expanded.
The CSRC also published corresponding draft rules on market-making, in which brokerages actively quotes in a security, providing liquidity and depth to markets, while profiting from the difference in the bid-ask spread.
The CSRC is introducing market-making now because “the STAR Market has been operating smoothly, and various reform measures have been effective,” the regulator said. STAR, set up in 2019 to fund China’s technical innovation, currently hosts 379 listed companies worth a total of RMB 5.3 trillion ($831.57 billion) in market value.