India, Jan. 25 -- A market maker is a crucial institutional participant in the capital market ecosystem, responsible for ensuring that securities can be bought and sold smoothly without sharp price disruptions. In simple terms, a market maker provides liquidity by being continuously ready to buy and sell a particular stock. In a market like India, where liquidity varies sharply between large-cap, mid-cap, and SME stocks, the role of a market maker becomes especially important in maintaining trust, price continuity, and orderly trading.

Under Regulation 261 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, market making is compulsory for SME IPOs and is backed by specific inventory requirements, net worth thres...