KASE Approves New Edition of Market Maker Rules
OREANDA-NEWS. June 30, 2010. The Board of directors of Kazakhstan Stock Exchange (KASE) approved KASE internal document "Rules on market maker operation" (the Rules) in a new edition, reported the press-centre of KASE.
The new edition was developed on the basis of the current edition of the Rules in accordance with offers on improvement of market maker operation, approved by KASE Board of directors on May 27, 2010.
The new version of the Rules was developed due to changes in the current edition of the document regarding the time of setting quotes, mandatory quotes spreads, fines and benefits, provided for market makers, and multiple quotes, which resulted in the necessity to change the document structure.
1. Specialist vs market maker distinction cancelled. This was done as currently specialists are little required by market players due to high mandatory quote and spread requirements imposed on specialists. KASE may return to the distinction with new requirements and duties for specialists.
2. Market makers may use an option of time-out - periods within the trading day, provided to a market maker for setting new mandatory quotes, when a market maker is allowed not to execute his duties. The time out regimen for market makers of certain securities shall be determined individually depending on the type and liquidity of the securities. The duration of time out shall be set with specifications on financial instruments. For example, the total duration of time out within one trading session on liquid shares and bonds may not exceed 30 minutes, on illiquid shares - 15 minutes.
3. Market maker must maintain mandatory quotes in the determined periods as determined by the Rules - within 15 minutes of the opening of trading session, during the stand-by mode and during the share closing auction.
4. Spreads depend on liquidity:
- shares, trading in the supreme category, and liquid shares - 7 %;
- illiquid shares - 10 %;
- bonds - 4 %;
- bonds, yield of which is not calculated with the KASE trading system, - 8 %.
As compared with the current Rules spreads were narrowed for liquid shares from 10 % to 7 % (of a bid quote), and enlarged for bonds from 2 % to 4 % (on difference in absolute terms between YTM values), and left unchanged for illiquid shares.
5. Market maker liabilities changed, including, for failure to timely set and maintain mandatory quotes depending on the time of such failure, and for failure to set mandatory quotes.
The Rules were supplemented with Appendix 3 "Specification on currency futures market maker status".
The edited Rules must be made effective within two months, following its accord with the Agency of the Republic of Kazakhstan on regulation and supervision of financial market and financial organizations (FSA).
After the introduction of the Rules the following internal documents will be deemed void and invalid:
- Rules on market makers operation;
- Specification of market maker status for stock market members;
- Specification of dollar market maker status;
- Specification of ruble market maker status;
- Rights and responsibilities of members of Kazakhstan Stock Exchange, enjoying status of market makers of international financial organizations.
The edited Rules will be released at the KASE website after accord with FSA.