Market makers must

Market makers must

• A. Quote prices on a monthly basis during 90% of official trading hours; ensure liquidity for individual securities
• B. Quote prices only during opening hours
• C. Quote prices for ETFs only
• D. Not provide liquidity

Answer: (A)

Market makers exist to keep markets orderly by providing continuous two-sided quotes—they’re ready to buy and sell a security and stand behind those prices for traders to transact against. Because markets can move quickly and traders need reliable liquidity, market makers are expected to be active during a large portion of official trading hours and to cover individual securities, not just a subset like ETFs or only at the open. This is why the statement that market makers must quote prices during the majority of trading hours (and ensure liquidity for individual securities) best reflects their role. Quoting only during opening hours would leave periods of the day without liquidity, and options limited to ETFs or stating they don’t provide liquidity contradict the purpose of market making.

Market makers exist to keep markets orderly by providing continuous two-sided quotes—they’re ready to buy and sell a security and stand behind those prices for traders to transact against. Because markets can move quickly and traders need reliable liquidity, market makers are expected to be active during a large portion of official trading hours and to cover individual securities, not just a subset like ETFs or only at the open. This is why the statement that market makers must quote prices during the majority of trading hours (and ensure liquidity for individual securities) best reflects their role. Quoting only during opening hours would leave periods of the day without liquidity, and options limited to ETFs or stating they don’t provide liquidity contradict the purpose of market making.