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Laura Anthony, Attorney
Legal & Compliance, LLC
330 Clematis Street, Ste. 217
West Palm Beach, FL 33401

Toll Free: 1.800.341.2684
Phone: 561.514.0936
Fax: 561.514.0832


LawCast
 

Market Makers

Market Makers

Market Makers are a critical component to the reverse merger process for any Company looking to go public. Market Makers are members of FINRA, the Financial Industry Regulatory Authority, and perform a variety of functions that allow private Companies to go public while creating a market for, and liquidity for, the Company’s stock.

There are more than 2,000 Market Makers in the U.S. Their primary function is to provide liquidity, whenever possible, to the trading market of the stocks they represent or “make a market in.” Market Makers stand by ready to buy and sell the stocks they represent at any time, regardless of whether they have another customer order to complete the transaction. When this occurs, the Market Maker takes the Company’s shares into inventory, going “at risk” by subjecting themselves to price fluctuations of that particular stock.

The OTC markets rely heavily on Market Makers to increase liquidity of trading and stabilize otherwise unmanageable price fluctuations by posting a bid and offer price for the stocks they represent.

Market Makers and FINRA

Since Market Makers are on the “front lines” of stock trading so to speak, they are most logically the ones most qualified to perform certain due diligence on the stock they represent.

In order to go public and receive a trading symbol, the Market Maker must submit a 15c211 application to FINRA on behalf of the Company. The 15c211 application is basically a notice to FINRA informing them that the Market Maker believes they have gathered sufficient due diligence on the Company going public that they can effectively quote their securities. Rule 15c211 also requires that the market maker’s research on the company going public is made available to anyone upon request.

Once the Market Maker submits the 15c211 application, FINRA may or may not request additional information. These questions are known as comments. Once FINRA is satisfied that the Market Maker has gathered sufficient information on the Company going public, and provided all necessary information in the form of the 15c211 application, the Company receives a trading symbol and is cleared for trading.

Contact us today. Inquiries of a technical nature are always encouraged.


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