The Bucharest Stock Exchange introduced a programme for Market Makers aimed at stimulating trading activity. By Irina Savastre, Head of GSS Romania
A new market making scheme will make it easier for investors to find a trading counterparty.
There will be two categories of the Market Makers are classified as follows:
1. Classical Market Maker (CMM) – the standard Market Maker, registered for a share that must comply with a set of specific parameters and for which the corresponding Market Maker fees apply.
2. Super Market Maker (SMM) - a special type of Market Maker registered for a share with additional quoting obligations (in terms of minimum volume, the minimum period for quoting during the continuous trading) balanced with a certain flexibility of the maximum spread and a lower fee level.
Revenue sharing scheme
As another incentive to boost the trading activity, the Bucharest Stock Exchange implemented a revenue sharing scheme for each Market Maker type:
Characteristics:
- Registered for a Super Market Maker for a particular share
- Rewarding a greater involvement
Applicability:
- Only for Super Market Makers
- Distinctly for each Super Market Maker
- Distinctly for each share/Super Market Maker
- For trading activity on the proprietary account
- On a monthly basis
Day trading component
Moreover, both will benefit from the new day trading component on top of the revenue sharing scheme, applicable according to specific provisions:
Characteristics:
- Trades executed for a certain share in order to open and close the position of the respective day.
- Lower volume will qualify in case of volume differences.
Applicability:
For Classic Market Makers and Super Market Makers
- Shares included in BET-XT and EBS
- Exclusively for trading on retail clients’ accounts
In short, all brokers that want to enter into the new programme can choose to be registered for certain shares, whether as a Classic Market Maker or as a Super Market Maker. The Super Market Maker will place trading orders (buy/sell) for a bigger volume of shares and for a more extended period of time than the ones placed by the Classic Market Maker, and it will pay half of the trading fees applied to the Classic Market Maker.
At the end of each month, participants have to prepare and send reports on their intraday activity to the Bucharest Stock Exchange, assuming full liability for the correctness and the completeness of the data provided.
The applicability of the day trading component is 3 months at least, followed by an assessment period of this pilot programme component. It may be suspended at any time if the Bucharest Stock Exchange suspects that the conditions for this scheme are not met.
The Bucharest Stock exchange will evaluate the programme after a 6 month trial period after which it will decide on possible adjustments or extensions.