MCX to launch market making in Gold Mini options from Sept 1

Our Bureau Mumbai | Updated on August 12, 2020

MCX, the country's largest commodity exchange, has introduced market making or Liquidity Enhancement Scheme in Gold Mini Options with effect from September 1 to encourage active participation and market development.

Under the scheme, members designated as market makers with the exchange shall be eligible for monthly incentives, based on fulfilment of the committed quote obligations.

Members who are willing to become market maker should have a net worth of ₹1 crore or above and no record of serious disciplinary action against them in the last one year.

The exchange, based on a competitive bidding process, will appoint the lowest (qualified) bidder in terms of ‘bid incentive amount’ as single designated market maker for the product till the scheme remains in force.

The maximum incentive bid is fixed at ₹40 lakh a month. The designated market maker will provide two-way continuous quotes on all trading days as per the quote obligations described by the exchange.

Members have to submit their bids in password-protected file through e-mail before August 13. Bidders have to provide the password of the file before 1 pm on on August 14.

If the password of file is not received by the specified time, the bids of the member will be disqualified, the exchange said.

In case two participants provide same quote, they will be given one hour’s time to resubmit their revised bids on the same day.

The evaluation of bids and selection of market maker will be completed on August 14 and successful bidder will be communicated, the exchange said.

MCX is launching market making in gold option when the BSE had received positive response on bullion options contracts. The BSE had registered highest turnover of ₹5,010 crore on July 29. The exchange has completed consecutive deliveries of Gold mini on 'Options in Goods' framework seamlessly at the designated vault in Ahmedabad, Gujarat.

Published on August 12, 2020

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