NSE to launch liquidity enhancement scheme for power futures
Business Business: As part of its efforts to increase participation in the soon-to-be-launched electricity futures contracts, the National Stock Exchange (NSE) has announced a liquidity enhancement scheme for the segment.
“NSE is now pleased to introduce LES in electricity futures (monthly basis weight) from July 11, 2025, to encourage active participation and market growth,” the exchange said in a circular issued on Friday.
In May, the exchange, which is the largest in terms of market share in both cash and derivatives segments, had received regulatory approval for the launch of electricity futures contracts. The exchange is betting big on the segment as electricity derivatives are one of the largest market segments globally.
Electricity futures are a financial contract where participants lock in the price of electricity today for a specified month in the future. No actual electricity is delivered. Any eligible trading member, corporate buyer, generator, trader or financial institution approved by the Securities and Exchange Board of India (SEBI) can trade in these futures.
Electricity futures may lead to reduction in electricity price in spot market: NSE Electricity futures may lead to reduction in electricity price in spot market: NSE Meanwhile, according to the NSE circular, trading members interested in providing continuous quotes as Market Maker (MM) will have to register with the exchange. Further, the eligibility criteria also include, among other things, minimum net worth of Rs 5 crore, no serious disciplinary action against the member in the previous year and algo registration in commodity derivatives segment. “The exchange shall appoint two Market Makers (MM1 and MM2) for electricity futures contract on the basis of competitive bidding process. The successful bidder shall be appointed as MM for a period of 6 months from the date of launch of LES on electricity futures,” the circular said, adding that a trading member can apply to become a designated Market Maker under only one category – MM1 or MM2. In terms of incentives, Market Maker 1 will receive a monthly incentive of Rs 85 lakh, while Market Maker 2 will receive a monthly incentive of Rs 45 lakh upon meeting all the quote conditions.
