Designated Market Makers (DMMs) - NYSE

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Chapters in this video

  1. 0:00 The buyer of last resort: Dan the DMM
  2. 1:35 NYSE one-DMM-per-stock vs Nasdaq multiple market makers
  3. 2:35 The dual obligation dilemma: affirmative vs negative
  4. 4:40 Principal vs agency roles and the same-trade trap
  5. 5:53 Trading against the trend in a surging market
  6. 7:24 Rapid-fire exam recap

What this video covers

  • Why the New York Stock Exchange (NYSE) assigns exactly one Designated Market Maker (DMM) per security, and how this differs from the multiple market maker model on Nasdaq
  • What the National Best Bid and Offer (NBBO) requirement means for DMM quoting obligations
  • How the affirmative obligation forces a DMM to step in and commit capital when public liquidity dries up, including buying on declines and selling on rallies
  • How the negative obligation requires a DMM to step back and refrain from trading for its own account when sufficient public interest exists
  • The critical distinction between principal transactions (dealing from inventory with disclosure) and agency transactions (matching orders for commission)
  • Why a DMM cannot act as both agent and principal in the same transaction, and how to flag this violation on the exam
  • How to apply the four core conduct requirements during periods of market volatility, including trading against the trend to dampen price swings

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Read the Free Lesson → free · no signup wall