Market makers help publicly traded companies in improving liquidity and enhancing their stock price. Market makers buy shares from the company and sell them to investors at different prices to maintain liquidity. They also place 2-way orders, which are buy and sell orders at the same time, to make shares available to buyers or accept sales from investors who want to exit.
Merchant bankers, who also have brokerage licenses, play the role of market making. They charge a monthly fee from the issuing company for this activity.
In an SME IPO, the issuing company must give 5% of the issue volume to the market maker.
Market makers sign an agreement with the issuing company specifying their duties and responsibilities in an IPO.
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