The BSE will introduce a liquidity enhancement scheme in Brent crude oil futures from February 1 to boost trade in the commodity derivatives segment, the stock exchange said on Tuesday. Under the liquidity enhancement schemes (LES), brokers and other market intermediaries are given incentives for a specified period of time to bring in liquidity and generate investor interest in securities that have limited trading activity. In a circular, the BSE said the exchange “shall introduce liquidity enhancement scheme in Brent crude oil futures in commodity derivatives with effect from February 1, 2020”. The introduction of the scheme would be subject to the approval of market regulator Sebi, it added.
Earlier in March 2018, markets regulator Sebi had said “sensitive” commodities that are prone to frequent price fluctuation as well as government interventions will not be eligible for liquidity enhancement schemes. Sebi had asked exchanges to put in place a mechanism to ensure that the liquidity enhancement schemes did not create artificial volumes, did not take away liquidity form the market, is not manipulative in nature and will not lead to mis-selling of the product in the market.