INSUBCONTINENT EXCLUSIVE:
Leading stock exchange BSE will launch liquidity enhancement scheme on monthly single stock options and index options from next month.
Under
the liquidity enhancement scheme (LES), brokers and other market intermediaries are given incentives for a specified period of time to bring
in liquidity and generate investor interest in securities which have limited trading activity.
"The exchange shall be launching the
liquidity enhancement scheme on monthly single stock options and index options of equity derivative segment with effect from September 1,
2018," BSE said in a notice.
Index options allow an investor the right to purchase or sell the underlying stock index for a defined time
Besides, index options are cash settled when exercised, as opposed to options on single stocks where the underlying stock is transferred
when exercised.
The bourse said it will monitor performance of the programme including presence of market makers and their compliance with
the quote obligations through a mix of online and offline monitoring tools.
Besides, it will publish information on the programme from time
to time.
LES on stock options and index options programme may remain in force for a maximum period of three years as a part of Sebi
rule.
Once the scheme is discontinued, the exchange has the option to re-introduce it provided "it is less than the three year period since
the introduction of scheme on that security".
