Holding the Market
Candlefocus EditorAs regulations continue to evolve, there are often new rules and laws that are implemented to monitor and combat the practice of holding the market. For instance, broker-dealers or market makers may have to add liquidity in some markets with little depth. They are then responsible for providing liquidity support during periods of extreme price volatility or when the bids or offers of a security can't be met.
Due to the high amount of capital required and the perception of it as an unfair practice, holding the market is often frowned upon. It is a bold move and can easily lead to circumstances where the holding company is open to scrutiny from regulators. The market makers and dealers who hold the market also run the risk of being held liable if the market pool is deemed as unfair.
In addition, as technology continues to evolve, it has made the practice of holding the market more difficult and complex. Artificial intelligence is now being used to help traders quickly adjust their bids and offers based on the real-time market information. This has made the task of holding the market even more difficult for those with limited capital and resources.
In the end, holding the market is a delicate and difficult practice to engage in. While it is still possible to make money in these kind of markets, traders and investors must weigh the risks of holding the market against the potential rewards. Those willing to take the risk must also remain diligent and in compliance with relevant regulations.