Home FCA Handbook SSR SSR 5 SSR 5.16 Guidance on the application of paragraph (a) of the Glossary definition of market making activities to shares that are not liquid shares and equity derivatives traded on a trading venue
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SSR 5.16 Guidance on the application of paragraph (a) of the Glossary definition of market making activities to shares that are not liquid shares and equity derivatives traded on a trading venue

13/07/2026G
  1. (1) For admitted shares that do not qualify as liquid shares and for equity derivatives traded on a trading venue:
    1. (a) whether someone has a regular and ongoing presence on the market should be assessed against the standards defined in the rules of the trading venue where the admitted share and equity derivative is admitted to trading for recognised market makers/liquidity providers of such instruments;
    2. (b) competitive prices should be within the maximum bid/offer spreads for market markers/liquidity providers as laid down by the trading venue, and any asymmetry between the prices of bids and offers will be considered in light of the guidance in SSR 5.14.3G; and
    3. (c) the size of the orders should not be significantly smaller than what is required from market makers/liquidity providers recognised under the rules of the trading venue where the concerned admitted shares and equity derivatives are traded.
  2. (2) For admitted shares which are not liquid shares, where the trading venue referred to in (1) does not provide for rules on one of the criterion set out in (1)(b) and (c) for market makers or liquidity providers, reference can be made to the requirements laid down in the rules for market makers/liquidity providers by another trading venue where the concerned admitted share is actively traded.
  3. (3) Where such an alternative is not possible, as a last resort and depending on the concerned criteria:
    1. (a) competitive prices should be measured as a proportion of the average spread observed on the concerned admitted share in the trading venue where the admitted share is traded or, ultimately, should be within the maximum bid/offer spreads laid down by the trading venue; and
    2. (b) the size of the orders or quotes issued in the market making capacity should be assessed in relation to the average trading size for the concerned admitted share on the trading venue where it is traded.
  4. (4) For equity derivatives, where the trading venue referred to in (1) does not provide for rules referred to in (1)(a) to (c) for market makers or liquidity providers, a person may refer to the relevant requirements laid down in the rules for market makers/liquidity providers by another trading venue where a similar equity derivative contract is actively traded, if any.
13/07/2026G

A person may demonstrate that it meets the criteria in SSR 5.16.1G by reference to historical trading.