1、August 2022Observations on Market Liquidity EnhancementFSDC Paper No.54ContentsExecutive SummaryBackground Market liquidity and its importance Global market liquidity ETFs and Market Makers ETF liquidity and spill-over effects ETF liquidity and market depthMarket makers and the trading ecosystemCase

2、 Studies:Infrastructure Enhancements and Their Impact on LiquidityExample 1:HKEX-Improved liquidity from stamp-duty exemptions for ETFs Example 2:Tokyo Stock Exchange-Improved liquidity from streamlined ETF settlement processExample 3:Enhanced trading environment via self-match prevention mechanisms

3、Cost benefit analysis of infrastructure enhancements Potential Measures to Enhance Market Liquidity Enhancements of ETF trading activities Enhancements of general trading and clearing activities Upgrade of infrastructure and systems Conclusion Appendices Appendix 1.Market makers sources of profitApp

4、endix 2.Markets that have implemented self-match prevention mechanisms on multiple exchanges since 2008(by region)1223771213151517 18192020232527282829Executive SummaryHong Kong has been a successful world-leading IPO centre,having ranked first in IPO funds raised globally in seven out of the past 1

5、3 years.1 Such a status has been,in part,supported by Hong Kongs proximity and connectivity to the Mainland market,benefiting from the continuous economic growth and innovation of the latter.Despite the strong IPO market performance,secondary market activities in Hong Kong are arguably less vibrant,

6、especially comparing to other leading global financial centres.Secondary market liquidity is an important indicator showing the level of development and sophistication of a market.Numerous studies have shown that stocks with higher liquidity tend to trade at a premium and,thus,at higher prices.Tradi