BSE to stop liquidity enhancement incentive programme in equity derivatives, 3 others from April 1

Leading stock exchange BSE will discontinue the liquidity enhancement incentive programme in four segments, including equity derivatives from next month.

Besides, the exchange will stop such incentive programme in single stock futures, Sensex futures and Sensex options contracts. The liquidity enhancement incentive programmes (LEIPS) -- wherein both market makers and general participants get incentives in the form of cash payment for trading in these contracts -- will be discontinued with effect from April 1.

LEIPS in these contracts were introduced between 2013 and 2014. According to Sebi regulations, stock exchanges can introduce incentive schemes for brokers and intermediaries to enhance liquidity in illiquid securities in equity cash and derivative segments.

The programme offered four types of incentives to market participants -- trading volume-based daily cash incentives, open interest-based cash incentives paid on a daily basis, quote-based incentives and lower transaction fees for all active trading members.

Earlier, BSE had discontinued the liquidity enhancement incentive programme in the weekly options contracts on Sensex and single stock options contracts.