IND NSE Silver Liquidity Enhancement


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.

Regulators IND NSE
Entity Types B/D; IA
Reference Cir NSE/COM/62115, 24/2024, 5/22/2024; Cir NSE/COM/61977, 23/2024, 5/10/2024; Cir NSE/COM/60667, 09/2024, 2/13/2024; Cir 78/2023, 11/1/2023
Functions Compliance; Financial; Operations; Registration/Licensing; Reporting; Trade Reporting; Trading; Treasury
Countries India
Category
State
Products Commodities; Corporate; Derivatives; Fund Mgt
Regions AP
Rule Type Final
Rule Date 11/1/2023
Effective Date 11/26/2024
Rule Id 190243
Linked to Rule :42015
Reg. Last Update 5/22/2024
Report Section International

Last substantive update on 05/25/2024