After a company completes its financial audit and compliance process and receives SEC approval to list in the U.S., a critical yet often overlooked step is: selecting and managing market makers. A suitable market maker is not just a counterparty in trading, but a “valuation engine” and a “capital market partner.”
Why Market Makers Matter:
- Provide Initial Liquidity: When the stock lacks visibility and trading activity, market makers play a key role in maintaining price stability through active quoting and trading willingness.
- Establish Valuation Consensus: Continuous quoting based on market feedback helps form a market consensus on valuation.
- Connect to Investor Resources: Reputable market makers often have strong relationships with institutional investors, supporting future roadshows, fundraising, and uplisting activities.
Market Maker Selection Criteria:
- Quote Activity: Does the market maker have sufficient trading capacity and the ability to offer continuous quotes in the secondary market?
- Industry Experience Fit: Do they understand your sector and have experience with China-concept stocks or emerging markets?
- Investor Network: Can they connect you with U.S. institutional investors, family offices, or hedge funds?
- Compliance Record: Are they fully FINRA-registered with a solid track record of market making for multiple stocks?
Common Pitfalls:
- Mistaking “Quoting” for “Trading”: Some market makers may quote but lack actual willingness to trade.
- Overemphasizing Cost: Prioritizing the lowest cost may neglect the long-term strategic value and professional support.
- Lack of Post-Listing Strategy: Failing to implement valuation management after listing may lead to low stock price and financing difficulties.
Valuation Management Recommendations:
- Begin market maker selection at least 3 months in advance;
- Consider engaging 1–3 market makers to enhance trading depth;
- Maintain regular communication with market makers on quoting strategies and market sentiment;
- Pair efforts with an IR team to promote the company and educate investors.
Summary:
Selecting the right market maker is a critical step in entering the U.S. capital market. A partner who understands your growth strategy and is committed to long-term collaboration can be a powerful ally in enhancing valuation, ensuring liquidity, and facilitating future capital activities.
For more information about our advisory and consultation services and fees, contact us here or at +60 11 5636 6286 for our assistance.
