The Bombay Stock Exchange’s (BSE’s) scheme for market-making, known as the Liquidity Enhancement Incentive Programmes (LEIPs), will be launched on Wednesday, with the expectation that it would improve liquidity and benefit the retail investors in stock market. LEIPS-I will run up to October 25 and will be followed by another, six-month-long LEIPS-II from October 26.
“Currently, nearly 60 brokers have registered for LEIPS-I and we expect their number to swell to 400-500 soon. To start with, about 100 brokers could start trading, with a focus on futures for the sake of volumes,” Mr Anil Shah, Director, BSE, said here on Tuesday.
He said the BSE expected trading worth Rs 1,000 crore per day in the beginning and it may increase up to Rs 30,000-40,000 crore daily in the next two months.
LEIPs is expected to increase the daily turnover from the existing Rs 100-200 crore in the derivatives to Rs 2,000-3,000 crore, including about 30-40% from Gujarat alone. The scheme aims to generate more investor interest in derivatives, based on its benchmark Sensex and the underlying 30 stocks. The BSE has earmarked a total of Rs 107 crore for the scheme that will be in force for seven months in two phases.
Pursuant to the Securities and Exchange Board of India (SEBI) granting permission in June this year to the bourses to introduce liquidity enhancement schemes in the equity derivatives segment, the BSE had announced to launch LEIPs-I for one month (September 28-October 25) and LEIPs-II for six months from October 26, with the goal of creating lasting, self-sustaining liquidity in the BSE’s derivatives segment.
The scheme aims at rewarding the derivative members for building a ‘healthy’ order book, and is seen as a step by the exchange to reward entities generating a certain amount of volume in a segment.