Different forms of market making systems can be found in most developed capital markets. These markets, instead of having a pure electronic limit order book design, follow one of three forms of market making: 1) a quote-driven market making system, 2)a centralized market making system in an...

There is a significant disparity between theoretical and empirical models on the Specialist`s adjustment of inventory risk. Whereas theoretical work has shown that Specialist inventory rebalancing through the quoted prices is important to the functioning of the market, empiricists have failed to...