The Analysis Survey of Market Maker's Affect on Tehran Stock Exchange (2004 - 2006)

Empirical studies and theoretical principals make obvious that financial development and economic growth are interdependent. For developing capital market we must introduce appropriate instruments, prepare a suitable investment environment, and reduce market risks. A main risk in capital market is liquidity risk. Financial instruments and intermediaries, as a key part of advanced markets, have a considerable affect on market risk. Market makers are most important financial intermediary. They increase liquidity of financial securities by precise evaluation of market, and securities sell/buy. Market makers have started their activities on Tehran Stock Exchange since 2004. With regard to importance of market makers presence in TSE, this research besides of exploring of market making in other exchanges, describe various market making systems, comparable survey of rules and regulations on other exchanges and market making on TSE too. The Affects of market makers on TSE are examined with regarded to the market making regulation. For this propose, price trend and liquidity from 2004 to 2006, for 16 firms with the method of Vector Auto Regressive (VAR) studied. This research demonstrates that market making increased liquidity in market and effected on price trend.