Designated Market Makers’ Role during the Covid-19 Pandemic: Evidence from the KOSDAQ Market

This study explores the role of Designated Market Makers (DMMs) in the KOSDAQ market focusing on their influence on liquidity and volatility especially during the pandemic. Using a Three-Stage Least Squares (3SLS) regression model the analysis accounts for the inter-dependence between liquidity and volatility. The results show that designated market makers (DMMs) play a significant role in enhancing liquidity under normal market condition but they have little impact on volatility during these times. During the pandemic designated market makers are more effective at reducing volatility though their ability to sustain liquidity is less evident.