ASX Market Making Incentive Schemes
Market makers have an important role in ensuring that buyers and sellers can transact in markets. They provide liquidity to the markets by providing quotes during the trading day and updating their prices to reflect changes in the underlying markets.
ASX offers market making incentive schemes to further promote liquidity in the following markets:
| Bonds |
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| ETPs |
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| Equity ETOs |
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| Index Derivatives |
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| Interest Rate Derivatives |
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| Energy Derivatives |
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The appointed market makers receive incentives from ASX when making markets in accordance with the market making specifications under the schemes. The market making specifications include a minimum time period for making markets under the scheme, as well as a minimum liquidity requirement. There is also a limit on the maximum spread between the bid and offer price that a market maker can quote when making markets under the scheme.
The schemes recognise that there will be certain circumstances when the appointed market makers cannot reasonably be expected to make markets in accordance with the market making specifications.
More information on the ASX market making incentive schemes is provided below.* This information is a summary of select terms in the market making incentive agreements between ASX and relevant maker makers, and is not intended to be a definitive or comprehensive summary of those agreements.
* All references to time are to Australian Eastern Standard Time or Australian Eastern Daylight Time (as applicable) unless otherwise stated.
- Bonds
- Exchange Traded Products (ETPs)
- Equity Exchange Traded Options (ETOs)
- Index Derivatives
- Interest Rate Derivatives
- Energy Derivatives
Bonds
Australian Government Bonds
ASX offers a market making incentive scheme to promote liquidity in the Australian Government Bond market in the form of fee rebates. There are currently three appointed market makers for this scheme. The incentive is available to each of the appointed market makers when making markets in accordance with the following market making specifications:
Treasury Bonds
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement* | |
|---|---|---|---|
| Generally required to provide continuous two-way quotes during market opening hours (10:00am – 4:00pm). | Minimum quantity of 5,000 treasury bonds on each bid and offer or the face value equivalent of AUD 500,000. | Maturity less than 5 years | 20 cents |
| Maturity between 5 - 10 years | 35 cents | ||
| Maturity between 10 – 30 years | 50 cents | ||
* Applicable to Treasury Bonds with yields between 3-4%. Maximum spread requirement for Treasury Bonds outside this yield range to be agreed by ASX and the market maker.
Treasury Index Bonds
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement* | |
|---|---|---|---|
| Generally required to provide continuous two-way quotes during market opening hours (10:00am – 4:00pm). | Minimum quantity of 5,000 treasury index bonds on each bid and offer or the face value equivalent of AUD 500,000. | Maturity less than 5 years | 20 cents |
| Maturity between 5 - 10 years | 35 cents | ||
| Maturity between 10 – 30 years | 50 cents | ||
* Applicable to Treasury Index Bonds with yields between 2–3% and to Treasury Index Bonds with CPI adjusted face value of AUD 100 - 140. Maximum spread requirement for Treasury Index Bonds outside this yield / CPI adjusted face value range to be agreed by ASX and the market maker.
For further information click here.
Exchange Traded Products (ETPs)
ASX offers a market making incentive scheme to promote liquidity in nominated Exchange Traded Product (ETP) markets in the form of fee rebates. There are currently four appointed market makers for this scheme. The incentive is available to each of the appointed market makers when making markets for its nominated ETPs in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Generally required to provide continuous two-way quotes 80% of the time from 10:15am until commencement of Pre-CSPA (Closing Single Price Auction) Session State (generally 4:00pm) on any trading day (calculated over a calendar month). | Within a range of AUD 5,000 - 50,000 depending on product categorisation under the scheme. | For bid price less than AUD 5: within a range of 2 - 50 cents depending on product categorisation under the scheme. For bid price equal or greater than AUD 5: within a range of 40 – 1000 basis points (bps) of bid depending on product categorisation under the scheme. |
For further information click here.
Equity Exchange Traded Options (ETOs)
Single Stock Options
ASX offers a market making incentive scheme to promote liquidity in the Equity ETOs (single stock) market in the form of fee rebates and a share of a revenue pool. There are currently seven appointed market makers for this scheme. The incentive is available to each of the appointed market makers when making markets in its nominated classes of equity ETOs (single stock options) in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Continuous Quotation: Generally required to provide continuous quotes in 48 option series (for top 20 ETO classes) and 24 option series (for other ETO classes) for 50% of the time in a calendar month. Request for Quote (RFQ): Generally required to respond to 50% of RFQs issued in a class to the option series with a maturity of up to one year during a calendar month. Combined Requirement: Generally required to provide continuous quotes and respond to RFQ (as above) for an aggregate of 70% of the time in a calendar month. |
Within a range of 50 – 2000 depending on ETO class. | Within a range of 5 cents – 400 cents depending on ETO class and option premium. |
XJO Index Options
ASX offers a market making incentive scheme to promote liquidity in the Equity ETOs (XJO Index) market in the form of a fee rebate. There are currently ten appointed market makers for this scheme. The incentive is available to each of the appointed market makers when making markets in its nominated classes of equity ETOs (XJO index options) in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Continuous Quotation: Generally required to provide continuous quotes in 18 option series per class for 50% of the time in a calendar month. Request for Quote (RFQ): Generally required to respond to 50% of RFQs issued in a class to the option series with a maturity of up to one year during a calendar month. Combined Requirement: Generally required to provide continuous quotes and respond to RFQ (as above) for an aggregate of 70% of the time in a calendar month. |
For expiry term of 12 months: 30 contracts. Not applicable for expiry term greater than 12 months. |
Within a range of 6 – 80 points depending on premium range for the first 12 months. |
For further information click here.
Index Derivatives
Mini SPI 200 Index Futures
ASX offers a market making incentive scheme to promote liquidity in the Mini SPI 200 Index Futures market in the form of a fee rebate. There is currently one appointed market maker for this scheme. The incentive is available to the appointed market maker when making markets in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Generally required to provide continuous two-way quotes in the front four months for 80% of the time that the contract is available to be traded. | Minimum volume per side for best bid and offer of 10 lots. Minimum volume across all bids and offers of 50 lots. |
Bid / offer spread of corresponding parent SPI 200 Index Futures contract plus one (1) index point. |
S&P/ASX 200 A-REIT Index Futures
ASX offers a market making incentive scheme to promote liquidity in the S&P/ASX 200 A-REIT Index Futures market in the form of a fee rebate. There is currently one appointed market maker for this scheme. The incentive is available to the appointed market maker when making markets in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Generally required to provide continuous two-way quotes in the front month and second month (when front month has one week or less until expiry) for 80% of the time that the contract is available to be traded. | Minimum volume of 10 lots per side. | 0.50% (50 basis points). |
S&P/ASX 200 Financial-X-REIT Index Futures
ASX offers a market making incentive scheme to promote liquidity in the S&P/ASX 200 Financials-x-A REIT Index Futures market in the form of a fee rebate. There is currently one appointed market maker for this scheme. The incentive is available to the appointed market maker when making markets in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Generally required to provide continuous two-way quotes in the front month and second month (when front month has one week or less until expiry) for 80% of the time that the contract is available to be traded. | Minimum volume of 5 lots per side. | 0.15% (15 basis points). |
S&P/ASX 200 Resources Index Futures
ASX offers a market making incentive scheme to promote liquidity in the S&P/ASX 200 Resources Index Futures market in the form of a fee rebate. There is currently one appointed market maker for this scheme. The incentive is available to the appointed market maker when making markets in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Generally required to provide continuous two-way quotes in the front month and second month (when front month has one week or less until expiry) for 80% of the time that the contract is available to be traded. | Minimum volume of 10 lots per side. | 0.20% (20 basis points). |
S&P/ASX 200 VIX Futures
ASX offers a market making incentive scheme to promote liquidity in the S&P/ASX 200 VIX Futures market in the form of a fee rebate. There is currently one appointed market maker for this scheme. The incentive is available to the appointed market maker when making markets in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Generally required to provide continuous two-way quotes in all contract months during 80% of the time that the contract is available to be traded. | Minimum volume of 5 lots per side. | Within a range of 0.5 – 2.0 basis points. |
For further information click here.
Interest Rate Derivatives
The incentive available under interest rate derivative market maker schemes may include one or more of a fee rebate, share of a revenue pool or provision of ASX connectivity infrastructure.
ASX 30 Day Interbank Cash Rate Futures
ASX offers a market making incentive scheme to promote liquidity in the ASX 30 Day Interbank Cash Rate Futures market. There are currently two appointed market makers for this scheme. The incentive is available to each of the appointed market makers when making markets in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Generally required to provide continuous two-way quotes during 80% of the time between 8:30am – 4:25pm on any trading day and 100% of the time between 4:25pm – 4:30pm on any trading day (calculated over a calendar month). | Minimum volume within a range of 50-150 lots per side. | Within a range of 4 ticks (2 basis points) to 8 ticks (4 basis points). |
ASX 90 Day Bank Bill Futures
ASX offers a market making incentive scheme to promote liquidity in the ASX 90 Day Bank Bill Futures market (expiry months 5 to 16). There are currently two appointed market makers for this scheme. The incentive is available to each of the appointed market makers when making markets in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Generally required to provide continuous two-way quotes during 80% of the time between 8:28am – 4:25pm on any trading day and 100% of the time between 4:25pm – 4:30pm on any trading day (calculated over a calendar month). | Within a range of 5 - 150 lots per side. | Within a range of 2 ticks (2 basis points) and 5 ticks (5 basis points). |
ASX Packs and Bundles on 90 Day Bank Bill Futures
AASX offers a market making incentive scheme to promote liquidity in the Packs and Bundles on 90 Day Bank Bill Futures market. There is currently one appointed market maker for this scheme. The incentive is available to the appointed market maker when making markets in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Generally required to provide continuous two-way quotes during 75% of the time between 8:45am – 4:25pm on any trading day (calculated over a calendar month). | Minimum volume within the range of 15 - 40 lots per side. | Within a range of 3 ticks (1.5 basis points) and 8 ticks (4 basis points). |
Australian 3 Year and 10 Year Treasury Bond Options
ASX offers a market making incentive scheme to promote liquidity in the Australian 3 Year and 10 Year Treasury Bond Options markets. There is currently one appointed market maker for this scheme. The incentive is available to the appointed market maker when making markets in accordance with the following market making specifications:
3 Year and 10 Year Treasury Bond Ordinary and Serial Options
| Contract Month | Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement | |
|---|---|---|---|---|
| Continuous Quotation | First serial and spot quarter. | Generally required to provide continuous two-way quotes for option strikes with an exchange delta between 0.05 and 0.50 during 75% of the time between 8:30am – 4:20pm and 100% of the time between 4:20pm – 4:30pm. | Minimum volume of 100 lots per side. | 5 ticks (2.5 basis points) |
| Request for Quote (RFQ) | Second serial and second quarter. | Generally required to respond to 75% of requests for quote received for contracts outside the continuous quotation range between 8:30am – 4:30pm. | Minimum volume per side of: 3 Year: 100 lots outright no basis or 200 lots basis futures. 10 Year: 100 lots |
6 ticks (3 basis points) |
| Custom Market Request | Front serial and front quarter. Second serial and second quarter. |
Generally required to respond to 75% of requests for quote on custom market strategies received between 8:30am – 4:30pm. | Minimum volume per side of: 3 Year: 100 lots for straddles and strangles; 200 lots for call and put spreads, etc. 10 Year: 100 lots |
6 basis points |
Australian 20 Year Treasury Bond Futures
ASX offers a market making incentive scheme to promote liquidity in the 20 Year Australian Treasury Bond Futures market. There are currently two appointed market makers for this scheme. The incentive is available to each of the appointed market makers when making markets in accordance with the following market making specifications:
| Minimum Time Requirement | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Provide continuous two-way quotes during 75% of the time between 8:34am – 4:25pm and 100% of the time between 4.25pm and 4:30pm. | Minimum volume of 100 lots per side. | 2 ticks (1 basis points) in the spot month and 8 ticks (2 basis points) in the next month and the two days leading up to spot month expiry. |
For further information click here.
Energy Derivatives
Australian Electricity Futures & Options
There are currently no appointed market makers for an Australian electricity futures and options market maker incentive scheme. ASX is interested in receiving applications from market participants who wish to be considered for appointment as a market maker for this scheme.
Australian Gas Futures
There are currently no appointed market makers for an Australian gas futures market maker incentive scheme. ASX is interested in receiving applications from market participants who wish to be considered for appointment as a market maker for this scheme.
New Zealand Electricity Futures and Options
ASX offers a market making incentive scheme to promote liquidity in the Benmore and Otahuhu Base Load Electricity Futures markets in the form of a share of a revenue pool. There are currently four appointed market makers for this scheme. The incentive is available to each of the appointed market makers when making markets in accordance with the following market making specifications:
Otahuhu and Benmore Base Load Monthly Futures
| Minimum Time Requirement* | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Generally required to provide continuous two-way quotes in the front 6 months between 3:30pm - 4:00pm on general business days in Auckland and Wellington. | Minimum volume of 20 contracts per side, with a refresh of 10 contract traded. | If contract price is above NZ$30, each offer must be no more than 5% above corresponding bid. If contract price is below NZ$30, each offer must be no more than 10% above corresponding bid. |
Otahuhu and Benmore Base Load Quarterly Futures
| Minimum Time Requirement* | Minimum Liquidity Requirement | Maximum Spread Requirement |
|---|---|---|
| Generally required to provide continuous two-way quotes in all quarters between 3:30pm - 4:00pm on general business days in Auckland and Wellington. | Minimum volume of 30 contracts per side, with a refresh of 10 contract if traded. | If contract price is above NZ$30, each offer must be no more than 5% above corresponding bid. If contract price is below NZ$30, each offer must be no more than 10% above corresponding bid. |
For further information click here.
* All references to time are to New Zealand Standard Time or New Zealand Daylight Savings Time (as applicable).