To lure the TRECH holding members towards market making the Karachi Stock Exchange (KSE) has announced a cash reward ranging from Rs 10,000 to Rs 100,000 to be paid by the end of every month to the best performing market makers.
“The Exchange is now offering a financial attractive incentive scheme for a limited time,” said the front regulators at KSE in a notice while inviting the all TRECH holding members to apply for becoming KSE’s designated market makers.
The KSE invited applications from the market participants and TREC holding members for becoming market makers in any of the eligible instruments in Stock Index or Cash Settled Single Stock Futures.
Under the Exchange’s incentive scheme cash rewards would be paid to the KSE-approved market makers on the basis of their Trade Execution Commitment (TEC) implying the number of open contracts at the end of every day during the month. The least number of unique clients or UINs set ranges from 10 to 100 for a month.
The market makers executing 90 to 99 trade commitments with 10 clients or UINs would get Rs 10,000 while those ensuring 900 and above TECs would be rewarded with Rs 100,000.
“This incentive scheme is limited and is offered on a first come first serve basis for each of Single Stock Cash Settled Futures Scrip or the Index Futures,” the KSE notice said.
Adding during the tenure the scheme, the counter already chosen and activated by a KSE approved market maker would not be available to any other TREC holder under the scheme in question for the duration of scheme.
Enticing the members to apply for the market making job, the KSE underlined a number of benefits the members would be getting out of becoming the market makers.
“This presents a great opportunity to TREC holders to broaden their product range and client base to generate additional brokerage income beyond traditional business,” it said. It said one of the basic benefits for market maker was that the Exchange would forgo its transaction fee (LAGA) for it besides passing on the transaction fee obtained from the counterpart to the market maker for an initial period of time, e.g. 1 year.
“Besides the direct monetary benefit from the above, the market maker also enables his clients to hedge or take positions (long + short) in the Single Stock Cash Settled and Stock Index Future Contracts,” it added.
Dwelling on why the KSE needed market makers, the Exchange said the activation of market makers would generate liquidity and depth for the bourse thereby facilitating smooth entry and exit while optimizing impact cost.
Setting March 20 as a deadline for submission of the Expressions of Interest, the KSE also attached with the notice a list of the eligible scrips for market making in the Cash Settled Futures that includes Fauji Fertilizer, OGCL, Pakistan Oilfield Limited, Pak Petroleum, MCB Bank, Engro, Lucky Cement, DG Khan Cement, PSO, NBP, Engro Foods, Hub Power, Attock Refinery, Nishat Mills, UBL, FFBL, FATIMA, PTC, Bank Al-Habib, Bank Al-Falah, Adamjee Insurance, Arif Habib Corp, KAPCO, Askari Bank, Dawood Hercules, FCCL, LOTPTA, CHCC, PAKRI, NCL, NCPL, NPL and NETSOL.
The eligible indices listed include KSE-30, BKTI and OGTI.
