DEPARTMENT : TRADING Download Ref No : NSEIFSC/TRADE/090 Date : February 23, 2018 Circular Ref. No : 011/2018

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1 NSE IFSC LIMITED DEPARTMENT : TRADING Download Ref No : NSEIFSC/TRADE/090 Date : February 23, 2018 Circular Ref. No : 011/2018 All Members, Sub: Revision to Liquidity Enhancement Scheme (LES) at NSE IFSC Limited This has reference to the Exchange circulars ref. nos. NSEIFSC/TRADE/045 dated September 22, 2017, NSEIFSC/TRADE/049 dated September 29, 2017, NSEIFSC/TRADE/061 dated November 21, 2017, NSEIFSC/TRADE/067 dated November 28, 2017, NSEIFSC/TRADE/073 dated December 21, 2017 and NSEIFSC/TRADE/081 dated January 17, The following are the revisions to the LES scheme for Futures on NIFTY 50 which shall replace all provisions of LES on Futures on NIFTY 50 as mentioned in the aforementioned circulars. It shall be effective from March 10, A. Incentive Scheme for Futures on NIFTY 50 The salient features of the scheme for Futures on NIFTY 50 are as follows: Types of Incentives The following incentives shall be offered as part of the LES: 1. Incentive for Market Makers (MM) who give continuous quotes 2. Incentive for liquidity providers - Trade level incentive 3. Incentive for members who maintain minimum specified open interest 1. Market Making Incentives Registration of Market Makers Trading members who are interested in providing continuous quotes as Market Makers shall be required to register with the Exchange on or before March 7, 2018 as per format specified in Annexure 1. Members registered as Market Makers shall be required to fulfill order level obligations as specified in this circular. The eligibility criteria for Market Makers are as given below: Net worth of Rs. 1 Cr. (USD 150k approx.) No serious disciplinary action against the member in the last year Order level obligations for Market Makers Between 9:15am and 3:30pm Registered market makers would be required to fulfill the following obligations between 9:15 am and 3:30 pm on all trading days in the Near month contract and from three days prior to expiry

2 in the next month contract: Simultaneous presence on both sides (buy/sell) of the contract for at least 80% of the trading time Market makers shall be required to provide continuous quotes with specified size and spread in order book as per the below table Price Point Maximum Spread (USD) Minimum number of contracts on both sides (Buy and Sell) Topline $1.3 4 Next 4 Price Point* Difference between the top line and the 5 th price point should not exceed $3 Cumulative quantity in the next 4 price points should be 10 lots *It is mandatory for the Registered Market Makers to quote in all the 4 price points below the top line. Those Registered market makers who fulfill their quoting obligations between 9:15 am and 3:30 pm shall be paid from a daily pool of $1200/- on pro-rata basis. The maximum market making incentive payable for a Registered Market Maker per day shall be $500. Non-fulfilment of quoting obligations would lead to non-payment of incentive for the registered market makers. Between 8:00 am and 9:15 am and 3:30pm to 11:30 pm Registered market makers would be required to fulfill the following obligations between 8:00 am and 9:15am and 3:30pm to 11:30 pm on all trading days in the Near month contract and from three days prior to expiry in the next month contract: Simultaneous presence on both sides (buy/sell) of the contract for at least 80% of the trading time Market makers shall be required to provide continuous quotes with specified size and spread in order books as per the below table Price Point Maximum Spread (USD) Minimum number of contracts on both sides (Buy and Sell) Topline $3 1 Next 4 Price Point* Difference between the top line and the 5 th price point should not exceed $4 Cumulative quantity in the next 4 price points should be 10 lots Those Registered market makers who fulfill their quoting obligations between 8:00 am and 9:15am and 3:30pm to 11:30 pm shall be paid from a daily pool of $250 on pro-rata basis. The maximum market making incentive payable for a Registered Market Maker per day shall be $100. Non-fulfilment of quoting obligations would lead to non-payment of incentive for the registered market makers. While the performance against the above obligations shall be monitored on a daily basis, the incentives shall be paid on a monthly basis. 2. Trade Level Incentive for Futures on NIFTY 50 Trade level Incentive will be applicable to all trading members who trade at NSE IFSC on

3 Futures on NIFTY 50. The incentive will be paid out on turnover in dollars terms for trading in the Near month contract and from three days prior to expiry in the next month contract as well. Only those trades with originating order having maximum order quantity of 10 contracts or less in case of active orders and non-market maker passive orders would be eligible for trade level incentive. Further, only those members who have executed trades of minimum 100 lots on NIFTY 50 Futures contracts on a gross basis for the day shall be eligible to receive trade level incentive. Between 9:15am and 3:30pm The following cash incentives shall be payable per USD 1 million of trading value in futures between 9:15am and 3:30pm: Member Trade Level incentive per USD 1 million of traded value Non-Market Maker USD 25 Market Maker Active Order resulting in trade USD 25 Market Maker Passive Order resulting in USD 30 trade Trade level Incentive for Futures on NIFTY 50 for trades between 9:15am and 3:30pm shall be payable from a daily pool of USD 1500/- proportionately to the trading members based on their turnover subject to the terms specified above. Between 8:00 am and 9:15am and 3:30pm to 11:30 pm The following cash incentives shall be payable per USD 1 million of trading value in futures between 8:00 am and 9:15am and 3:30pm to 11:30 pm: Member Trade Level incentive per USD 1 million of traded value Non-Market Maker USD 25 Market Maker Active Order resulting in trade USD 25 Market Maker Passive Order resulting in USD 40 trade Trade level Incentive for Futures on NIFTY 50 for trades between 8:00 am and 9:15am and 3:30pm to 11:30 pm shall be payable from a daily pool of USD 500/- proportionately to the trading members based on their turnover subject to the terms specified above. While the performance shall be monitored on a daily basis, the incentives shall be paid on a monthly basis. 3. Open Interest Incentives Structure for Futures on NIFTY 50 For all the trading members who maintain a daily end of day Open Interest, the open interest incentive shall be paid as under: Description Incentive payout Incentives Per Day Per lot (USD) 0.15 Open Interest Incentive for Futures on NIFTY 50 shall be payable from a daily pool of USD 350/- proportionately to the trading members based on their end of day open interest.

4 The Exchange shall monitor the performance of the scheme and reserves the right to amend / discontinue the same at any time with an advance notice of 15 days. The scheme shall be in operation till April 30, For and on behalf of NSE IFSC Limited Yogesh Jain Head - Trading Telephone No Fax No id / ifsctradesupport@nseifsc.co.in

5 Annexure 1 (On the letterhead of the applicant member) Application Form for Registering as Market Making at NSE IFSC Limited To, The Director NSE IFSC Limited Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (E) - Mumbai Dear Sir/ Madam, We M/s. are trading members of NSE IFSC Limited having its registered office at are desirous to Register as Market Makers of the Exchange announced vide exchange circular no. NSEIFSC/TRADE/090 dated February 23, 2018 for the following Product Product Name: Futures on NIFTY 50 We have fulfilled all the eligibility conditions as given in exchange circular no. NSEIFSC/TRADE/090 dated February 23, 2018 We are aware that NSE IFSC Limited reserves the right to render any member ineligible for further participation in the Liquidity Enhancement scheme if the member engages in activities that are detrimental to the development of the market. This can also lead to withholding of incentives and lead to legal proceedings. We understand that NSE IFSC Limited reserves the right to amend / discontinue the Liquidity Enhancement scheme at any time with an advance notice of 15 days. We agree to comply with the terms and conditions as specified in Exchange Circular Ref. No NSEIFSC/TRADE/090 dated February 23, 2018 as may be amended from time to time. For <<Member Name>> Signature of Designated Director & Stamp Name: Date: Location: