BSEs New Derivatives Rates To Lower Transaction Costs For All
The Bombay Stock Exchange is introducing revised transaction charges in the equity derivatives segment with effect from Tuesday, December 29, 2009. The targeted reduction in effective spreads and impact costs, along with the innovative fee structure, can potentially result in substantially lower transaction costs for all market participants.
This new pricing scheme is designed to improve depth and liquidity in the BSE equity derivatives segment. It will help shrink quoted spreads and thus reduce impact cost. The proposed structure is a transparent and equitable way to attract liquidity to the BSE platform.
When combined with mid-month expiration design, the BSE index and single stock futures and options markets now provide a whole new range of hedging, investment and trading opportunities to Exchange members and their retail and institutional clients.
The following transaction charges will apply with effect from Tuesday, December 29, 2009 in BSE’s derivatives segment:
Transaction charges applicable for Passive orders inclusive of IPF and TGF charges
Stock Futures and Index futures (on execution) (Rs.1 per lakh) # Rs.1.5 per lakh
Transaction charges applicable for Active orders inclusive of IPF and TGF charges
Stock Options and Index options (on execution) (Rs.15 per lakh)## Rs.20 per lakh
IPF: Investor Protection Fund TGF: Trade Guarantee Fund
# (Rs 1 per lakh) will mean that the Exchange will pay Rs. 1 per lakh of transaction value to the member who has placed passive order in the order book which has matched in Stock Futures or Index Futures.
## (Rs. 15 per lakh) will mean that the Exchange will pay Rs. 15 per lakh of the total premium paid to the member who has placed passive order in the order book which has matched in Stock Options or Index Options.
The above transaction charges will be applicable uniformly across all valid orders executed in the Exchange’s Equity Derivatives segment. Executed orders will be identified as passive or active on the basis of their respective time stamps assigned by the BSE system. As per the Exchange trading system design, two orders cannot have the same time stamp.
Passive Orders: Passive orders are defined as the orders that already exist in the order book at the time of matching (order taking place).
Active Orders: Active orders are defined as the orders that are matched against the orders already existing in the order book at the time of matching (trade taking place).