A market maker or liquidity provider is a company that quotes both a buy and a sell price in a financial instrument or digital asset held in inventory.
Market makers create important benefits to token issuers and exchanges. First and foremost, market makers enable liquid trading so that buyers and sellers can readily buy and sell the asset at reasonable prices while minimizing the friction costs of transacting. In other words, market makers help you to maintain healthy order books with tight bid/ask spreads. Healthy order books minimize price volatility and increase the stability of the token valuation.
Liquidity is important as the degree to which an asset can be traded without notably affecting the stability of its price. Market making is a well-established financial practice used in the traditional financial markets for decades.
A market maker on an exchange provides instant depth to your order books, narrows your spread therefore lowering the transaction costs to traders and helps you grow and sustain your market share.
Market makers act as the buyers and sellers ensuring efficient trading conditions for market participants thus attracting more investors and overall traded volume of a given asset.
For reference, typically over 50% of trade volume on the Stock Markets is directly provided by professional Market Makers.
While not a prerequisite, in many cases, exchanges do require a project to have a market maker on board prior to listing in order to avoid having illiquid or inactive markets on their platform.
Having a market maker on board adds value to your order book and helps you get listed on more professional exchanges as these venues try to avoid including projects that have low demand and few market participants resulting in low trading volumes.
Even where an Exchange is willing to list your Token for a fee, it is highly advisable to ensure that you are well positioned to facilitate the organic growth of demand and trading volumes by engaging the services of a market maker.
Additionally, a market maker will support liquidity at milestone events for your Project.
A professional market maker does not seek to profit from trading activities and operates on a 0% Profit/Loss principle in a market-neutral manner thus maintaining a tight bid-ask spread and maximising liquidity for the client at all times.
Some market makers attempt to profit by “stepping out” of the market in adverse trading conditions or by placing a wide bid-ask spread therefore lowering the overall liquidity of the instrument. This is considered as a bad practice in our industry.
At GlobalStar we concentrate on what we do best; providing uninterrupted professional liquidity for our clients. We do not engage in proprietary trading, OTC deals or any number of other exotic offerings. Our mission is clearly defined, our service is professional and efficient with easy to understand, transparent pricing.
We believe in fair and ethical pricing that accurately reflects the complexity of the task at hand.
Our commitment is to bring traditional finance best practices to digital asset markets and to facilitate an efficient trading experience whilst minimising the slippage cost of transactions.
We commit to maintaining a specific bid-ask spread by deploying our algorithmic trading strategies around the clock with constant monitoring and performance optimization.
GlobalStar operates on the principle of maximum transparency and provides comprehensive performance reports on a weekly basis backed up by a weekly review call with your designated account manager.
Globalstar does not provide inventory for our clients or engage in proprietary trading. We connect our trading software through API access and operate through a designated trading account with all funds remaining property of the client at all times.
GlobalStar recognises the importance of corporate governance measures aimed at preventing money laundering, terrorist financing, and other financial crimes. This is particularly important given that digital assets (“VCs”) facilitate easy online access and global reach which make them attractive to move and store funds for money laundering and terrorist financing purposes.
As such, GlobalStar implements and maintains its Anti Money Laundering (AML) and Know Your Customer (KYC) protocols and procedures in furtherance of the Company’s legal and ethical compliance responsibilities in the jurisdictions where we do business.
We, therefore, cannot exempt any customers from providing us with the information that enables us to comply with these requirements prior to establishing a business relationship.