What is Liquidity Provider (LP)?
  • The purpose of Liquidity Provider is to ensure stable price by providing bid and ask quote continuously to constituent stocks with less traded volume, which lack liquidity, at a certain level.
  • The purpose of Liquidity Provider is entering into an agreement with listed companies to take on the responsibility of ensuring liquidity and presenting the price above a certain quantity to narrow the large bid-ask spread.
  • Obligatory quote to ensure liquidity supply: If the gap between the best ask quote and the bid quote exceeds 2% (can be set at the range within 2% if the LP contract has been entered into between the listed company and LP securities company), obligatory quote corresponding to the trading volume that is greater by a certain number of times is presented to both seller and buyer to minimize the gap.
  • Deadline for obligatory quote: LP determines the condition of the market such as spread and considers the minimum amount of time required to provide the quote, ensuring that the price is presented within five minutes if any need for obligatory quote arises.