**Abstract**
On August 2nd, the New Third Board initiated the first round of network testing for its market-making business. "From 8:00 in the morning to 10:00 at night, the technical team guided the entire process, and everyone worked together. It was an unforgettable Chinese Valentine’s Day," said one participant. A Beijing-based brokerage official who took part in the test shared that the event was a significant milestone. He also mentioned that a second full-scale network test is scheduled for August 9.
The market maker system is set to launch officially on August 25th, marking a new era for the New Third Board. Despite the excitement, many industry players have faced challenges over the years. Some securities firms are struggling with collecting continuous supervision fees from listed companies, while others are behind on listing and refinancing fees. Additionally, the high costs of upgrading brokerage systems to meet market-maker requirements have put pressure on firms. However, they remain committed, believing in the long-term potential of the market-making model.
Although the system is now in the final countdown, it remains a relatively unknown trading method in China. Only a few people have heard of it, and even fewer have participated. According to Cheng Xiaoming, dean of the Zhongguancun New Third Board College, the opportunities and risks of the market maker model depend largely on how the market perceives its nature and profit structure. Many listed companies still misunderstand the role of market makers, viewing them merely as brokers or exchanges. Similarly, some brokers continue to operate under outdated direct investment or self-trading models, which could lead to inefficiencies.
Cheng warns that this lack of understanding may result in a polarization among securities firms, with only the most professional ones thriving in the New Third Board space. The data shows that as of July 30, 66 sponsored securities firms had submitted applications for market-making preparation, with 46 obtaining approval. Major brokerages like CITIC, GF Securities, and China Merchants have all established dedicated teams for the initiative.
Despite the progress, many listed companies are still unclear about the concept of market making. Some are hesitant or unsure about how to proceed, while others are overly optimistic, expecting immediate benefits without proper planning. According to one Beijing-based source, profit remains a key factor in selecting companies for market-making, even if it's not explicitly stated. They argue that just as a vegetable seller wouldn't want to sell rotten produce, brokers aim to select strong, profitable companies.
However, Cheng Xiaoming emphasizes that this approach misunderstands the true purpose of the market maker system. It is not about maximizing short-term gains but about guiding investors toward value-based investments. Brokers who treat the system as a self-trading opportunity risk missing out on long-term success.
As the deadline for market transfer approaches, many listed companies are still unprepared. Only 20% of enterprises have managed to find two brokers willing to act as market makers, while the rest struggle to understand the process. Some companies are simply following trends without fully grasping the implications.
One company, Xingzhu Information, has taken the lead by becoming the first to initiate market-making. It has already secured three brokers to support its listing, including CITIC, GF, and Shenyin Wanguo. The company's strong financial performance, with a net profit of around 27.5 million yuan in 2013, highlights the high standards required for market makers when selecting stocks.
Meanwhile, regulatory changes continue to shape the landscape. On August 1st, the CSRC announced plans to improve the GEM and create a separate tier for unprofitable tech and internet firms after one year on the New Third Board. While this has sparked debate, many investors and brokers remain uncertain about the practical implementation of such policies.
Overall, the New Third Board is entering a critical phase. With the market-making system set to launch, the coming weeks will determine whether the sector can truly thrive or face further challenges. For now, the focus remains on preparation, understanding, and adapting to a rapidly evolving market.
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