NSE to levy fee on multi-leg orders in currency derivatives
To ensure fair trading activity in currency derivatives segment, National Stock Exchange (NSE) will start levying charges on multi-leg order entry facility
New Delhi: To ensure fair trading activity in currency derivatives segment, National Stock Exchange (NSE) will start levying charges on the multi-leg order entry facility that allows members to place multiple orders at one go.
The move also comes at a time when regulators and exchanges are keeping a close tab on currency derivative trading to deal with any possible excessive volatility. A multi-legged order can have at least two order legs.
“In order to facilitate and encourage fair usage of such order entry facility... charges will be levied for 2 Leg and 3 Leg orders in currency derivatives segments," NSE said in a circular. The facility allows a trader to place a combination order across different derivative contracts.
The exchange would start charging for the multi-leg order entry facility from 1 August. Charges would be based on the basis of order execution efficiency —the ratio of number of trades resulting from 2L/3L orders and total number of orders.
For more than 90% execution efficiency, the exchange will not levy any fee. A fee of ₹ 0.01 will be levied on each 2L/3L order for execution efficiency between 70% and 90% and the same will be ₹ 0.02 and ₹ 0.03 for execution efficiency ranging 50% and 70% and less than 50% respectively.
“For the purpose of calculation, all 2L/3L orders, i.e., order entry, order modifications and order cancellations shall be considered," NSE said.
“The charges shall be computed on a daily basis and will be collected by a debit to the Exchange dues account of the respective members on monthly basis only if the amount is equal to or greater than ₹ 100 for a particular month," it added.
The exchange has provided a multi-leg order entry facility in currency derivatives segments through which members can place combination orders such as 2 Leg and 3 Leg which are immediate or cancel Indian Oil Corporation (IOC) in nature.
This facility enables members to place through a single entry, orders for multiple contracts in the normal order book for IOC matching.
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