 "Sebi introduces 'LES' to cash segment")
The scheme can be used for securities that have an impact cost of greater than 2% for an order size of Rs 1 lakh. In simpler words, for stocks that move by more than 2% in any direction for an order size of Rs 2 lakh. Shares in the 'permitted to trade' category will be eligible under this scheme.
Brokers said LES will benefit newest bourse MCX-SX, which will launch equities trading on Monday in over 1,110 listed companies through the 'permitted to trade' category.
“Pursuant to the introduction of LES scheme in derivatives segment to enhance liquidity in illiquid derivative products, there was demand that similar scheme may also be introduced for the equity cash market. It has therefore been decided to permit stock exchanges to introduce LES to enhance liquidity of illiquid securities in their Equity Cash market.,” Sebi said in a circular today.
Sebi has said that the scheme can continue till the security achieves mean impact cost of less than 2% for an order size of Rs 1 lakh during 60 trading days, the regulator said.
The incentives under all LES (both Equity Cash and Derivative Segment), during a financial year, shall not exceed 25% of the net profits or 25% of the free reserves of the stock Exchange, whichever is higher, Sebi has said.
LES, which helps in bringing down the impact costs for trading, was introduced in the equity derivative segment in June 2011. BSE has successfully used this scheme to shore up its derivative segment volume.