Unlocking Market Potential with Liquidity Enhancement Scheme (LES)

Transforming Financial Services in IFSC

OVERVIEW

  • The Bullion Exchange in the IFSC has decided to introduce the Liquidity Enhancement Scheme (LES) to improve liquidity in illiquid commodity derivatives contracts.
  • Objective: Increase market participation and contract volumes.
  • Approval: LES requires prior approval from the Governing Board and will be monitored quarterly.

Key Features of the LES

  • Approval & Duration: Valid for one year or as decided by the Governing Board.
  • Transparency: The scheme is objective, transparent, and non-discriminatory.
  • Market Disclosure: Modifications or discontinuation of the scheme will be disclosed at least 15 days in advance.

Market Maker & Liquidity Provider Incentives

Incentives for participants include:

  • Discounts in fees
  • Cash Payments or fee adjustments in other segments
  • Shares, Options, and Warrants: The total incentives will not exceed 25% of the Bullion Exchange’s net profits or free reserves.

Securities Eligible for LES

  • Selection Criteria: The Bullion Exchange sets its own benchmarks for selecting securities to enhance liquidity.
  • Re-introduction: LES can be re-introduced on the same security after discontinuation.
  • Market Dissemination: The list of eligible securities will be publicly disclosed.

Ensuring Market Integrity & Compliance

  • The Bullion Exchange in the IFSC is committed to enhancing liquidity in the commodity derivatives market through the introduction of the Liquidity Enhancement Scheme (LES).
  • This scheme will promote market transparency, provide clear incentives for market makers, and ensure a fair and secure trading environment.
  • With regular monitoring and adherence to legal and regulatory standards, the LES aims to drive growth and stability in the market.

CONCLUSION

  • Integrity Measures: Monitoring systems will prevent manipulation, self-trades, and trades solely for incentives.
  • Conflict of Interest: A framework is in place to disclose conflicts of interest for market makers.
  • Regulatory Compliance: The Bullion Exchange ensures all activities are in line with applicable laws and IFSCA regulations.

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