SME segment: BSE eases compliance burden for market makers

Leading stock exchange BSE has eased penal structure for non compliance with 'market making obligation' on its small and medium enterprise (SME) platform. The new penal provision would come into force from June 1, BSE said in a circular.

A market maker is a dealer in securities or other assets who undertakes to buy or sell at specified prices at all times. The main obligation of a market marker is to provide liquidity in the market for securities listed on BSE's SME platform. The exchange imposes fine on a market maker, in case he is not able to provide the desired liquidity in a particular security as per the specified guidelines.

It levies a penalty on the market maker in case he is not present in the market (offering two way quotes) for at least 75 per cent of the time. In case of absence of the market maker for one day, BSE said it will issue a warning letter. At present, Rs 2,000 is imposed in such scenario.

If the absence stretches for two consecutive days, a penalty of Rs 2,500 would be imposed. Further, the penalty would be Rs 5,000, Rs 15,000 and Rs 25,000 in case of absence for more than 2 days and up to 5 days; more than 5 days and up to 7 days; and over 7 days and up to 15 days respectively.

The exchange said if the market maker would be absent for more than 15 days and up to 30 days, a penalty of Rs 50,000 would be imposed and in addition, market marker would be suspended. At present, BSE levies a fine of Rs 10,000, Rs 25,000, and Rs 50,000 in case of absence from more than 1 day and up to 5 days; over 5 days to up to 10 days; more than 10 days and up to 15 days respectively. Market maker was suspended if his absence stretched for more than 15 consecutive days.

The exchange, earlier this month, decided to reduce the listing fee for its SME platform by 25 per cent amid challenges faced by small and medium enterprises due to coronavirus pandemic..