Market Makers
Market Makers and Liquidity Providers contribute to market efficiency by providing executable quotes and supporting price discovery.
Market Makers on 21X
Definition
A Market Maker is an investment firm pursuing a market-making strategy that involves posting firm, simultaneous two-way quotes of comparable size and competitive prices for one or more DLT Financial Instruments.
Responsibilities
Market Makers on 21X are responsible for:
Providing continuous bid and ask quotes in designated instruments
Maintaining competitive pricing and order book depth
Supporting orderly trading and price discovery
Operating according to platform trading rules and liquidity requirements
Requirements
To become a Market Maker on 21X, firms must:
Be admitted to 21X as a Participant
Hold appropriate authorization as an investment firm where required
Maintain the technical and operational capability to provide quotes on an ongoing basis
Liquidity Providers on 21X
Definition
A Liquidity Provider is an investment firm that does not pursue a market-making strategy within the meaning of Art. 17(4) and 48(2) MiFID II, but assumes the role of Liquidity Provider for a particular DLT Financial Instrument in the context of a liquidity provision program implemented by 21X to improve liquidity in that instrument.
Responsibilities
Liquidity Providers on 21X are responsible for:
Providing liquidity for the relevant admitted-to-trading DLT Financial Instrument under the applicable liquidity provision program
Quoting in accordance with the market model or fee model applicable to Liquidity Providers
Supporting improved trading conditions and market liquidity in the designated instrument
Requirements
To become a Liquidity Provider on 21X, firms must:
Be admitted as a Participant on 21X
Be an investment firm
Not pursue a market-making strategy for that role
Be designated or included by 21X in a liquidity provision program for the relevant DLT Financial Instrument
Frequently Asked Questions
1) What is the difference between a Market Maker and a Liquidity Provider on 21X?
On 21X, Market Makers and Liquidity Providers both enhance liquidity but operate under different obligations:
Market Makers actively pursue a market-making strategy by posting firm, two-way quotes on a regular basis. They must meet strict quoting obligations to maintain continuous liquidity.
Liquidity Providers contribute liquidity at the best bid or offer but are not bound by the same rigorous quoting requirements as Market Makers.
2) What are the requirements to become a Market Maker on 21X?
To qualify as a Market Maker, firms must:
Be an investment firm under MiFID II (if based in the EU)
Be admitted as a Professional Participant on 21X
Pursue a market-making strategy and sign a Market Maker Agreement with 21X
Provide proof of authorization for proprietary trading
Maintain efficient systems to ensure compliance with obligations
Be available during all trading hours
3) Does 21X require Market Makers to adhere to specific regulatory standards?
Yes, Market Makers based in the EU must comply with:
MiFID II requirements for proprietary trading and market-making
Market Abuse Regulation (MAR) and other applicable financial regulations
21X's rules for quoting, record-keeping, and reporting
4) Can Market Makers outside of the EU act on 21X?
Yes, Market Makers based outside the EU can participate on 21X and are not required to hold a local MiFID II authorization. Instead, they must comply with 21X's rules on quoting, record-keeping, and reporting.
5) Is there an application or approval process for Market Makers?
Yes, the process includes:
Completing onboarding as a Professional Participant
Submitting a Market Maker application with your strategy and authorization proof
Signing the Market Maker Agreement with 21X
Undergoing review and approval by 21X
Publication as an approved Market Maker on the 21X website
6) What incentives does 21X offer to Market Makers?
21X and issuers provide incentive programs including maker fee discounts and special rebates for liquidity provision.
7) Which trading pairs or assets does 21X prioritize for market-making activities?
Assets on 21X include:
Tokenized stocks
Tokenized ETPs such as ETFs, ETCs, and ETNs
Tokenized bonds or other securitized debt instruments
Tokenized Fund Shares (UCITS)
8) Are there minimum liquidity or volume requirements for Market Makers?
Yes, Market Makers must meet Presence Time, Quote Size, and Spread Requirements according to the 21X Rulebook and asset-specific Market Maker agreements.
9) What APIs or trading tools does 21X provide for Market Makers?
21X offers:
REST API for asset and trading data and order submission
Smart Contract ABI for interacting with the on-chain Order Books
SDK for easy smart contract implementation
Price Stream and Chainlink Oracles for real-time price data
10) What is the fee structure for Market Makers on 21X?
The fee structure is outlined in the Fee Schedule on the 21X website. Special incentive programs apply for specific assets. Reach out to learn more.
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