Laws and sections by number or title, due dates, pages, and updates.
Stock Exchanges in the International Financial Services Centre may introduce liquidity enhancement schemes for listed securities and products. The Governing Board of the Stock Exchange must approve the scheme before implementation. The Stock Exchange must monitor the scheme at quarterly intervals and review its effectiveness every six months. The Stock Exchange submits half-yearly reports to the International Financial Services Centres Authority. The scheme must remain objective, transparent, non-discretionary, and non-discriminatory. The scheme must specify incentives such as fee discounts, fee adjustments, cash payments, or share issuances. The Stock Exchange must disclose any scheme modification or discontinuation at least fifteen days in advance. The Stock Exchange creates a specific reserve for incentives that is excluded from net worth calculations.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
Ask about this circular
[Image omitted. See the official document.]
CIRCULAR
F. No. 286/IFSCA/PM(CMD-DMIIT)/2021/4
March 31, 2022
To,
All Stock Exchanges in the International Financial Services Centre (IFSC)
Dear Sir/Madam,
Sub: Guidelines for Liquidity Enhancement Scheme
Liquidity in the listed securities is a crucial determinant of success of Stock Exchanges in any jurisdiction. However, in a nascent stage of a jurisdiction, attracting liquidity on a Stock Exchange may require certain incentives for market participants. To facilitate this, the Authority has decided to review the Liquidity Enhancement Scheme being operated in IFSC.
Introduction of Liquidity Enhancement Schemes
(a) The scheme shall have the prior approval of the Governing Board of the Stock Exchange and its implementation and outcome shall be monitored by the Board at quarterly intervals.
(b) The scheme shall be objective, transparent, non-discretionary and non-discriminatory.
(c) The scheme shall specify the incentives available to the market makers / liquidity providers and such incentives may include discount in fees, adjustment in fees in other segments, cash payment or issue of shares, including options and warrants.
(d) The scheme shall not compromise market integrity or risk management.
(e) The effectiveness of the scheme shall be reviewed by the Stock Exchange every six months and the Stock Exchange shall submit half-yearly reports to IFSCA.
(f) The scheme, including any modification therein or its discontinuation, shall be disclosed to the market atleast 15 days in advance.
(g) Outcome of the scheme (incentives granted and volume achieved - market maker wise and security wise) shall be disseminated monthly.
(h) The scheme shall comply with all the relevant laws.
Securities eligible for Liquidity Enhancement Schemes
Market Integrity
Market maker / liquidity enhancer
The Stock Exchange shall create a reserve specifically to meet incentives/expenses of the Liquidity Enhancement Scheme, based on the normative study of the LES in the domestic market and such reserves shall not be included in the calculation of net worth.
The Stock Exchanges are directed to:
This circular is issued in exercise of powers conferred by section 12 of the International Financial Services Centres Authority Act, 2019 to develop and regulate the financial products, financial services and financial institutions in the International Financial Services Centres.
A copy of this circular is available on the website of the International Financial Services Centres Authority at www.ifsca.gov.in
Yours faithfully,
Praveen Kamat
Deputy General Manager
Division of Market Infrastructure Institutions and Technology
Capital Markets Department
email: praveen.kamat@ifsca.gov.in
Tel: +91-079-61809820
