Pursuant to SEBI Circular CIR/DNPD/5/2011 dated June 2, 2011 (BSE Notice no-20110602-18, dated June 02, 2011), permitting stock exchanges to introduce Liquidity Enhancement Schemes (LES) for illiquid securities in their equity derivatives segment, the Exchange has launched a series of Liquidity Enhancement Incentive Programmes (LEIPS) with the goal of creating lasting, self-sustaining liquidity in BSE's Futures & Options Segment.
The Exchange has been regularly amending the terms and conditions of its LEIPS programmes based on the overall progress of the programme, market feedback and policy changes. One such landmark policy change is the change in expiry cycle for derivatives contracts from mid-month to end-of-month expiry with effect from February 2012 contracts and onwards.
On this background, the Exchange has felt the need to run a separate liquidity enhancement programme for its Options sub-segment to infuse greater impetus and focused participation in developing the Options market at BSE.
In view of this, the Exchange is launching the third programme in the series viz. LEIPS-III on 1st February 2012. The programme focuses on Options in SENSEX and covers all SENSEX Options contracts with end-of-month expiry cycle. The programme incentivizes both MMs and GMPs by payment of cash for their participation as per prescribed terms and conditions.
Active trading members of Futures & Options segment of the Exchange who have already signed up in LEIPS-II programme as Gen-eral Market Participant (GMP) shall be treated as GMPs in LEIPS-III programme as well. Similarly, Market Makers (MMs) who have registered as MMs in LEIPS-II programme for SENSEX Options shall automatically qualify to be a MM in LEIPS-III programme.
LEIPS III envisages the MMs to have a continuous quoting obligation with specified size and spread in SENSEX options contracts. The programme offers 4 types of incentives to market participants –
· Trading volume based cash incentives paid on daily basis to MMs and GMPs
· Open Interest (OI) based cash incentives paid on daily basis for average daily OI to MMs and GMPs
· Quoting obligations based cash incentives paid on daily basis to MMs
· Lower transaction fees for all trading members for premium based turnover.
Details of LEIPS-III programme are enclosed herewith as Annexure.
Trading members are requested to make note of the programme details. For any further clarifications, please contact your designated Relationship Managers.
For and on behalf of
BSE Limited.
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Rajesh Saraf
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Sameer Vaze
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General Manager – Trading Operations
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Deputy Manager – Trading Operations
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January 13, 2012
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