How to Become a Market Maker
OverviewNASDAQ is a unique market organization that provides a competitive trading environment and efficient, low-cost execution of orders. There are multiple market participants, including market makers, order-entry firms and electronic communications networks (ECNs) that utilize NASDAQ's trading services.
Definition of a Market MakerA market maker is a NASDAQ member firm that buys and sells securities at prices it displays in NASDAQ for its own account (principal trades) and for customer accounts (agency trades).
Market Maker Capabilities•Enter, retrieve, monitor and adjust quotations in response to changing market conditions.
•Enter and execute orders in all of NASDAQ's systems.
•Compare and clear NASDAQ exchange trades through automated services
•Register the number of securities approved by the firm's local FINRA District Office. (FINRA provides regulatory services for all NASDAQ members on behalf of The NASDAQ Stock Market LLC.)
Requirements for UTP Trading of Commodity-Based SecuritiesNASDAQ has introduced new Market Maker requirements for UTP trading of commodity-based securities. Market Makers that trade these shares must submit: 1) a completed disclosure report, and 2) written procedures for trading these shares to FINRA in order to make markets in these securities. Read more.
Select Market Maker ProgramNASDAQ has launched the Select Market Maker Program, a certification created to highlight the quality of NASDAQ’s market making model by designating qualified market makers as “Select” on a stock-by-stock basis. Issuers are able to see a list of the firms that meet certain pre-set quoting and trading standards in their own stock. View the fact sheet for more information.
Registration ProcessA prospective market making firm must be or must apply to be a NASDAQ member. Firms can be in a pending status when starting their connection process to NASDAQ. For information pertaining to membership requirements, please visit the membership page.
If you are a NASDAQ member, and do not yet have connectivity to the NASDAQ systems, contact NASDAQ Subscriber Services at 212.231.5180 to choose an appropriate market participant identifier (MPID) and to establish connectivity through one of the NASDAQ protocols.
For all NASDAQ members that already have access to NASDAQ, please follow the steps outlined below:
Steps
1._____ Complete the Market Maker Registration Form (PDF) and fax it to NASDAQ Subscriber Services at 212.231.5426. If new services are required, also complete the NASDAQ Port Request Form (PDF) or the NASDAQ Front-End Access Form (PDF).
2._____ Have your clearing agency call the National Securities Clearing Corporation (NSCC) at 212.412.8623 to ensure a clearing arrangement.
3._____ Contact the local FINRA District Office to express an interest in becoming a NASDAQ market maker. The District Office will write to you requesting information.
4._____ Compile all information, and send it to the local FINRA District Office for review. (If all information is completed properly, the District Office will interview you and determine if you are qualified to be a NASDAQ market maker.)
5._____ The FINRA District Office will forward an approval form to NASDAQ's Subscriber Services department. (If your firm is not a FINRA member, the approval will be made by The NASDAQ Stock Market LLC.)
6._____ A NASDAQ Subscriber Services representative will notify you if you are permitted to make markets and will activate all your services.
AI
