Market Makers are required to place quotes (buy and sell orders at the same time) continuously in the order book with a predetermined minimum price spread and size during the „Free period” (main phase) of trading time, therefore increasing the liquidity of the order book and reducing the implicit cost of the trading.
In order to incentivize Market Making activity, BSE and KELER CCP provide 75% rebate from trading and clearing fee including hedge transactions on BSE’s cash market.
Transaction fee incentivized Market Makers’ obligations are the following at the moment:
Minimum quote size: 50 contracts on both the buy and sell sides, with no more than 50 percent difference between the two sides.
Maximum bid-offer spread: 0,5% (in the ratio of the MM’s mid-price)
Fulfillment obligation: Market Makers are obliged to meet the criteria in 70% of any given months’ total trading time in the ’Free period’ of trading. However they are allowed 3 trading days, where they can go under 70%, but never go under 50% in any of the trading days.
Market made expiration months:
a) the next December;
b) in the week of the closing day of item a) the second next December
The detailed market making rules can be found at Products and services / Rules and regulations / BSE rules on BSE’s website.
Market Makers in BUX future contract: