Description

NSE reinvites bids for Market Maker 3 and Market Maker 4 under the Liquidity Enhancement Scheme for Silver (30 kgs) Options on Goods contracts, with appointments effective June 1, 2026.

Summary

NSE has reinvited bids for Market Maker 3 (MM3) and Market Maker 4 (MM4) under the Liquidity Enhancement Scheme (LES) for Silver (30 kgs) Options on Goods contracts. This is an extension of the LES originally introduced in November 2023 and subsequently enhanced multiple times. Successful bidders will be appointed from June 1, 2026.

Key Points

  • NSE is reinviting bids for MM3 and MM4 roles in the Silver Options on Goods LES
  • Bid submission deadline: May 20, 2026 by 1700 hrs
  • Appointed market makers will commence from June 1, 2026
  • MM3 must quote at strike prices between MM1 and MM2 obligations
  • MM4 must quote at 4 OTM strike prices beyond strikes quoted by MM1, MM2, and MM3
  • Both MM3 and MM4 must provide 2-way continuous quotes in Calls and Puts on all trading days
  • Monthly presence requirement is 85% of total time specified by the exchange
  • Minimum lot obligation: 1 lot each on bid and ask side at Top Line and Second Line

Regulatory Changes

This circular builds on SEBI circular SEBI/HO/CDMRD/DMP/CIR/P/2018/55 dated March 26, 2018, which permitted LES in commodity derivative contracts. No new regulatory framework is introduced; this is a continuation and reinvitation under the existing LES structure.

Compliance Requirements

  • Eligible members must have a minimum net worth of ₹5 Crores
  • No serious disciplinary action against the member in the last one year
  • Existing market makers or their related entities are not eligible to apply for MM3 or MM4
  • Applicants must be registered algo members in the NSE Commodity segment
  • Market makers must submit bids in the format specified in Annexure I
  • MM3 and MM4 must maintain quote obligations per specified spread and lot tables
  • Maximum bid-ask spreads vary by premium range: ₹45 (for ₹0.50–₹500), ₹90 (₹500.50–₹1000), ₹180 (₹1000.50–₹2000), ₹270 (above ₹2000) at Top Line
  • Second Line spreads are offset from Top Line by ±₹20 to ±₹50 depending on premium range
  • NSE reserves the right to terminate market makers for non-fulfilment of obligations

Important Dates

  • May 16, 2026: Circular issued
  • May 20, 2026 (1700 hrs): Deadline to submit bids for MM3 and MM4
  • June 1, 2026: Appointed MM3 and MM4 commence operations

Impact Assessment

This circular has a moderate impact limited to commodity derivatives market participants, specifically those involved in silver options trading. By reinviting market makers, NSE aims to deepen liquidity in Silver (30 kgs) Options on Goods contracts. Tighter spreads and continuous quote obligations are designed to improve price discovery and market depth. The impact on broader equity markets is negligible; the circular is operationally significant only for registered commodity segment algo members seeking market maker roles.

Impact Justification

Operational circular for commodity derivatives market makers; affects liquidity in silver options but limited to a niche segment of market participants.