Did Dealers Fail to Make Markets during the Pandemic?

Chen, Jiakai; Liu, Haoyang; Rubio, David; Sarkar, Asani; Song, Zhaogang

Discussion Paper

Did Dealers Fail to Make Markets during the Pandemic?

Abstract: In March 2020, as the COVID-19 pandemic disrupted a range of financial markets, the ability of dealers to maintain liquid conditions in these markets was questioned. Reflecting these concerns, authorities took numerous steps, including providing regulatory relief to dealers. In this post, we examine liquidity provision by dealers in several financial markets during the pandemic: how much was provided, possible causes of any shortfalls, and the effects of the Federal Reserve’s actions.

Keywords: dealers; liquidity; COVID-19;

JEL Classification: G1;