New norms on liquidity enhancement schemes
Markets regulator Sebi on Wednesday eased framework pertaining to time period for introducing liquidity enhancement schemes on securities by stock exchanges.
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New Delhi: Markets regulator Sebi on Wednesday eased framework pertaining to time period for introducing liquidity enhancement schemes on securities by stock exchanges.
The regulator, in 2014, permitted stock exchanges to introduce liquidity enhancement schemes in equity cash and equity derivatives segments to enhance liquidity in illiquid securities.
Based on the experience of stock exchanges, it has been decided to modify the framework, the Securities and Exchange Board of India (Sebi) said in a circular.
Under the liquidity enhancement scheme, 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.
Under the new rule, Sebi said that stock exchange can introduce liquidity enhancement schemes on any security. Once the scheme is discontinued, the scheme can be re-introduced on the same security.
Earlier, stock exchanges were allowed to introduce liquidity enhancement schemes on any security for a maximum period of three years.
Once the scheme was discontinued, the scheme could be re-introduced on the same security provided it was less than the three year period since the introduction of scheme on that security.
