What is liquidity and why is it relevant to trading in warrants or CBBCs?

A liquid product has a tradable market with tight bid and ask prices and sufficient size, in which there are opportunities to buy and sell warrants or CBBCs. The provision of liquidity is an important feature of warrants and CBBCs because it allows investors to buy and sell warrants and CBBCs that may otherwise be illiquid (that is, have insufficient supply or demand). Issuers may provide liquidity in respect of their products through a designated liquidity agent (called a “liquidity provider”). In Hong Kong , liquidity providers are commonly known as “market makers”.  Each issuer must appoint one liquidity provider, who must be an Exchange participant, for each of its products.