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MUMBAI :
Multi Commodity Exchange of India on Wednesday stated it’s going to launch a liquidity enhancement scheme in the newly launched phase ‘choices on items’ with gold mini contract.
The liquidity enhancement scheme, popularly often known as market making, will begin from September 1, MCX stated in a round.
“The Exchange, based on a competitive bidding process, will appoint the lowest (qualified) bidder in terms of ‘bid incentive amount’ as a single designated market maker for the product till the scheme remains in force. The maximum incentive bid amount is ₹40 lakh per month,” the change round added.
The Securities and Exchange Board of India had allowed a liquidity enhancement scheme in 2018. Under the scheme, brokers and different market intermediaries are given incentives to deliver in liquidity and generate investor curiosity in securities for a specified time frame.
MCX, which had launched choices on futures in gold in 2017, had efficiently experimented with market making in the contract in April-October 2018.
The common each day turnover in the gold choices on futures, which was round ₹82 crore throughout six months prior to introduction of the market making in the contract, shot up to ₹791 crore through the six-months of the market making.
The choices on items phase is far simpler a product from merchants’ perspective and market making is probably going to brighten the prospects of gold mini contract, significantly due to unprecedented curiosity in bullion buying and selling due to the worldwide rally to document in gold, MCX stated.
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