Making market-maker mandates report-driven.

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Write a mandate that can be reviewed

A report is only as useful as the agreement it measures. Phrases such as “support liquidity” leave room for disagreement about success, especially when market conditions change. A reviewable mandate identifies the covered venues and pairs, operating periods, permitted activities, reporting requirements, and the limits of authority.

This is an editorial framework for structuring oversight, rather than a claim that all market makers offer the same obligations. The right targets depend on the asset, available inventory, venue mechanics, market conditions, and negotiated scope. A performance report should use the definitions agreed for that mandate.

Keep price outcomes separate from service obligations. Price appreciation is not evidence of compliant execution, and a declining price does not automatically demonstrate a quoting failure. The review must establish what the provider controlled and what the evidence can actually show.

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Build a small, explicit scorecard

Every metric needs a calculation method, a sampling interval, a data source, and a rule for exceptions. For instance, quote availability depends on what counts as an eligible operating period. Depth depends on the reference price and the distance from it. These details belong next to the metric, rather than in an undocumented spreadsheet.

Published exchange data can support a market-level assessment, but it may not identify which provider submitted each quote. Attribute provider performance only where the available evidence permits it. Record that limitation instead of treating every visible order as the appointed market maker’s activity.

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Explain exceptions without hiding them

A daily average can look healthy while a short interruption materially affects users. Report the distribution of conditions, adverse intervals, and the duration of any breach. Show exclusions separately so that a reader can understand both the observed market and the contractual calculation.

Each material exception should have a timestamp, affected venue, observation, suspected cause, and current status. Separate a confirmed cause from a working hypothesis. Missing feed data, a venue outage, depleted inventory, and a provider configuration error call for different responses.

Agree escalation paths before a stressful session. An operator may have authority to pause an activity but not to expand inventory exposure or move assets. A report should identify the decision required and the person authorised to make it. Later, record whether the corrective action resolved the issue and what evidence supports closure.

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Keep incentives tied to genuine market quality

Reporting choices influence behaviour. A target centred only on headline turnover can reward activity that does not improve a participant’s ability to transact. Mandates should prohibit fabricated activity and assess genuine, authorised services rather than price support or an arbitrary volume appearance.

IOSCO’s crypto-market recommendations identify conflicts of interest, market manipulation, operational risk, and cross-border issues as areas of concern. That policy context supports examining who performs a service, who assesses it, and how conflicts are disclosed; it does not prescribe this article’s scorecard. [1]

Where possible, use a review process with sufficient independence to question the provider’s explanation. Limit data access to authorised reviewers, preserve relevant evidence, and document unresolved differences. Independence should describe actual responsibilities, not just a different heading on the same report.

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Use a cadence that leads to decisions

Match the reporting cadence to the activity. Operational monitoring can flag immediate issues; a periodic review can assess persistent patterns, discuss exceptions, and decide whether the mandate needs adjustment. Significant incidents should not wait for the next scheduled report.

A concise review can cover three questions: were the agreed obligations met, what changed in the market or operating environment, and what action needs approval? Keep supporting data accessible without forcing every decision-maker to read raw feeds.

When the mandate changes, preserve the old definitions and the effective date of the new ones. That keeps later comparisons honest. A report-driven mandate is useful because it makes the relationship reviewable, including during periods when the outcome is uncomfortable.