Much importance has been placed on the liquidity of the financial markets since Demsetz in 1968. If you have never heard of a market maker before, it is simply a company that consists of being a broker or a bank that will be ready to buy. and sell shares at any time. There is a specific ‘bid’ and ‘ask’ price and a market maker creates an opportunity for the investor to sell his shares, even if there are no sellers willing to buy the shares at that time.

There is significant risk associated with this, but to offset the risk, the market maker typically keeps a spread on each stock he hedges, earning the difference between the ‘bid’ and ‘ask’ price. It can be very low, but when you consider that you could sell thousands of shares, it ends up being very lucrative.

Sometimes the information that is essential to posting a stock quote for a company through the OTCBB or Pink Sheets is done through a filing form known as Form 211 (also known as Rule 15c211).

Disclosure information about the issuer of the shares must be available for the listing to be published. All filing requirements and annual report will be required to trade with the over the counter bulletin board. Essentially, by providing liquidity in the market, market makers are compensated well enough. They are also members of FINRA, which used to be called NASD.

If you look, you will find that investor relations and a market maker will be closely intertwined. When investor relations deals with information that is disclosed to your bonds or shareholders, it also supports market regulatory requirements and other activities related to them. The information that the investor relations department investigates and publishes is also directly responsible for how other potential investors may view the company and may affect the company’s share price or earnings.

Investor relations may include annual reports, annual forecasts, press releases, etc. Press releases used to be the main paper in the past for investor relations, but these days they will include everything that the company and the investors could possibly need. By attracting investors to the company, you ensure that you create a source of capital for when you need it. For a market maker, the information published by these companies determines how much risk they are willing to take and when to ‘bid’ or ‘ask’.

In the US market, you may have a single stock specialist or exchange member who will act as the lead market maker. But on other commodity exchanges and on NASDAQ, you will have multiple market makers competing, but they may not have the same skill as the specialist. It would certainly help if you had a dedicated investor relations program to help ensure your investors receive information in a timely and elegant manner.

Additionally, you may want to consider engaging the services of a ‘Go Public’ law firm or corporate finance consulting firm experienced enough to help set up an investor program if you don’t already have one. Understanding the relationship between your investor relations and market makers could mean the difference in attracting the right investors to your business.

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