InsidersTradesSigma
Instruments & Market Microstructure
A regulatory framework that imposes continuous bid-ask quoting and liquidity provision duties on designated market makers, subject to exemptions during extreme volatility or low-liquidity conditions.
Market maker obligations exist under MiFID II Article 17 (EU), SEC Rule 10b-6 (US), and equivalent regimes globally. These rules require designated market makers to maintain executable quotes at specified spreads and minimum sizes during regular trading hours. Violations trigger regulatory sanctions, fines, and potential suspension. For insider trading surveillance platforms, market maker quoting patterns serve as a baseline microstructure signal, deviations from which may indicate information leakage or manipulation.
Exemptions and relief mechanisms allow market makers to withdraw from quoting during periods of extreme volatility, widened spreads, or when the primary listing experiences technical dysfunction. These carve-outs are critical for quant scoring systems, as they create legitimate microstructure noise that must be filtered from insider-trading-driven quote behavior. Monitoring opt-out timestamps and frequency across a market maker population reveals stress regimes and can correlate with informed trading activity concentration.