FAQs

• What is a Designated Market Maker (DMM)?
• Why is a DMM firm's capital so important?
• How does a company listing on the NYSE determine which market maker firm will trade its stock
• What are some of the distinguishing characteristics of a leading DMM?
• What’s the difference between old specialist and the new DMM?

What is a Designated Market Maker (DMM)?

A Designated Market Maker manages the trading of an issuer’s stock. They must maintain a fair, competitive, orderly and efficient market at all times, even in volatile market conditions. This means that all customer orders have an equal opportunity to interact and receive the best price on execution.

Why is a DMM firm’s capital so important?

The amount of capital available to the DMM is important to maintaining liquidity in the market for the stocks they trade. The DMM utilizes that capital by purchasing or selling stock in order to balance supply and demand. DMMs provide issuers with timely and pertinent market commentary on how and why a stock is trading in the marketplace.

How does a company listing on the NYSE determine which DMM should trade its stock?

Companies listing on the NYSE today have the option of choosing their DMM by interviewing representatives from a qualified pool of 3 to 5 firms. The company may also choose to have their stock allocated to a qualified DMM by the NYSE's Allocation Committee.

What are some of the distinguishing characteristics of a leading DMM firm?

A key measure of the quality of a firm’s market making ability is the percent liquidity provide. This is the percent of trades where the market maker is creating liquidity by taking the opposite side of a trade using its own capital. At Barclays Capital, we consistently achieve between 97% and 99% liquidity provide, with a goal to always reach 99%. Another distinguishing measure is the ability of a firm to provide timely and relevant information flow to its clients.

What are some of the value-added specialties that Barclays Capital can provide?

Barclays Capital provides comprehensive market intelligence through timely communications. Your Designated Market Maker knows the personality of your stock and creates communication tailored to your needs, including research from our Institutional Investor #1 ranked All-America Equity Research teams. Barclays Capital Market Makers also capitalizes on its partnership with its Institutional Corporate Marketing team; together, they are dedicated to leveraging marketing intelligence to advise corporations on interactions with investors.