Designated Market Makers (DMMs) - NYSE

What this video covers

• Why the NYSE assigns exactly one Designated Market Maker (DMM) per listed security, and how this structurally differs from Nasdaq's multiple competing market makers
• The five core obligations: maintaining fair and orderly markets, facilitating price discovery, providing liquidity with firm capital, minimizing volatility, and managing the auction
• The hard quoting percentages: 15% at the NBBO for lighter non-ETPs, 10% for heavier non-ETPs, and 25% for exchange-traded products (ETPs)
• The designated percentage drift rules: 8% for Tier 1 National Market System (NMS) stocks widening to 20% around the open and close, plus the wider Tier 2 bands
• How the affirmative obligation forces the DMM to step in and trade against the trend when public liquidity dries up
• How the negative obligation forces the DMM to step back and not trade for its own account when public interest is sufficient
• Why a DMM cannot act as both agent and principal in the same transaction, and what disclosure or compensation applies to each capacity