On Nov. 1, IND NSE introduced enhancement scheme in silver options.
IND NSE consolidated the salient features of the liquidity enhancement scheme (LES).
Silver options introduced to encourage participation in trading/market development.
Follows IND NSE Nov. 2021 extended LES scheme for gold mini options, see #42015.
Market Makers
Trading members interested in providing continuous quotes as market makers required to register with IND NSE; market makers required to fulfill order level obligations.
Eligibility: net worth INR 1 crore, no serious disciplinary against member in last year.
IND NSE will appoint three market makers (MM 1, MM 2 and MM 3) for the silver (30 kgs) option in goods contract based on a competitive bidding procedure.
Successful bidder appointed as market makers until the scheme remains in force.
Interested applicants can submit bids in format specified (see annexure I) on or before Nov. 16, 2023 to become eligible for being appointed as designated market makers.
Based on bids received, evaluation of bids performed per grading scale in annexure II.
Trading member may apply to be a designated market maker only under one category.
Circular provides info on minimum quote obligations and additional points for MMs.
Effectiveness
To become eligible as a designated market maker, interested applicants must submit bids by Nov. 16, 2023; LES in silver options is effective from Nov. 27, 2023.
Feb. 2024 More Market Makers
On Feb. 13, 2024, IND NSE enhanced LES of silver options by adding market makers.
MM1 and MM2 shall continue as MM1 and MM2 as per the enhanced LES of the circular.
MM3 appointed as per existing LES shall be discontinued with effect from Mar. 1, 2024.
IND NSE will appoint another 3 market makers, MM3, MM4 and MM5 for silver options.
Specifies the minimum quote obligations, quoting incentive and additional information.
Interested applicants can submit their bids in the specified format by Feb. 19, 2024.
The scheme shall be operational from Mar. 4, 2024 to May 26, 2024.
Document dated Feb. 13, 2024, received from IND NSE Feb. 15, summarized Feb. 16.
May 2024 Extension
On May 10, 2024, IND NSE extended LES for 6 months until Nov. 26, 2024; said it reserves the right to amend/discontinue at any time with an advance notice of 15 days.
May 22, 2024 Market Maker 4
On May 22, 2024, IND NSE outlined selection criteria for MM4; must meet criteria such as minimum net worth of INR 1 crore, no serious disciplinary actions in last one year.
Applications are restricted to already registered algorithmic traders in the segment.
MM4 will provide continuous quotes in both call and put options, obligations include quoting specific strikes, maintaining minimum presence of 85% trading time monthly.
Must provide a specified number of lots as well as adhere to maximum spread limits.
Performance is evaluated monthly; failure to meet obligations may result in INR 5 lakh penalty; the scheme details penalty structures for early withdrawal or non-compliance.
Scheme will be operational from Jun. 6, 2024 to Nov. 26, 2024; MM4 can earn monthly incentive of up to INR 3.5mn, provided that all obligations and requirements are met.
