Listen to a Business English Dialogue About Backing away
Skylar: Hey Shawn, have you heard of “backing away” in finance?
Shawn: No, I haven’t. What does it mean?
Skylar: “Backing away” occurs when a market maker refuses to fulfill their obligation to buy or sell securities at the quoted price, usually due to unfavorable market conditions or a lack of liquidity.
Shawn: Oh, I see. How does “backing away” affect investors?
Skylar: “Backing away” can disrupt trading and cause delays or difficulties for investors trying to execute trades at the quoted prices, potentially leading to missed opportunities or unexpected losses.
Shawn: That sounds frustrating. Are there any regulations in place to prevent “backing away”?
Skylar: Yes, regulators have rules in place to prevent market makers from backing away without valid reasons, helping to ensure fair and orderly markets for investors.
Shawn: I understand. Can market makers face consequences for backing away?
Skylar: Yes, if a market maker consistently backs away without legitimate reasons, they may face disciplinary action from regulators or lose their market-making privileges.
Shawn: Thanks for explaining, Skylar. “Backing away” seems like an important concept for investors to be aware of when trading in financial markets.
Skylar: Absolutely, Shawn. It’s essential for investors to understand how market dynamics like “backing away” can impact their trading experience and overall investment outcomes.