MIR-4.7.7A

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Past version: Effective from 01 Apr 2013 to 31 Dec 2018
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The general eligibility criteria for market makers include:

(a) A licensed exchange shall formulate its own objective eligibility criteria for licensed members to be appointed as market maker. The criteria should include but not limited to capital adequacy, net worth, infrastructure, trading experience, business continuity arrangement, risk management policy/procedure, minimum volume of business and person to be engaged in market making activities as principal;

(b) The licensed exchanges would prescribe the capital adequacy requirement for market makers which should be commensurate with the number of securities market maker proposes to make market and the type of security;

(c) A licensed exchange may lay down additional criteria also for market makers as risk containment measures;

(d) The licensed members desirous of acting as market maker for a particular security shall apply to the licensed exchange for registration as a market maker;

(e) If the licensed exchange is satisfied that the licensed member is eligible to carryout market making activities, the licensed exchange shall appoint such licensed members as market maker and enter into an agreement with the market maker specifying the date and time of commencement of its term as market maker;

(f) A market maker agreement should include the following terms and conditions:

(i) Rights and obligations of the market maker;

(ii) Duration of the Market Making Agreement;

(iii) Conditions under which Market Making Agreement may be terminated;

(iv) Time window during trading hours that the Market Maker shall be obliged to ensure presence on the order book;

(v) The maximum spread between the bid and offer price that market maker may maintain for the Designated Product;

(vi) Minimum, maximum and normal order size with agreed specifications; and

(vii) Minimum liquidity for each Designated Product; and

(g) All applicable terms and conditions including directives and or instructions issued by CBB from time to time shall be applicable to licensed member appointed as market maker.

Added: April 2013