NSE to introduce liquidity enhancement scheme for upcoming electricity futures | Check details | Stock Market News
The National Stock Exchange on Friday in an attempt to increase participation in the upcoming electricity futures contracts announced a liquidity enhancement scheme for the segment.
In a circular on June 27, the NSE announced that the enhancement scheme will be effective from July 11.
“NSE is now pleased to introduce LES in Electricity Futures (Monthly Base Load) with effect from July 11, 2025, to encourage active participation and market development,” it said.
The exchange — the largest in terms of market share in both derivative and cash segments — in May had received a green signal from the regulators to launch electricity futures contracts. The NSE has been focussing more on the segment, given the demand of power derivatives in the global market.
What is an electricity future?
Electricity futures are a financial contract whereby participants can lock the prices of electricity on a particular day for a certain month in the future. People who can trade in this future can include trading member, corporate buyer, generator, trader, or financial institution approved by the SEBI. No actual power is delivered through electricity futures.
What does the NSE circular say?
In its Friday circular, the NSE said that trading members who are interested in providing continuous quotes as Market Makers (MM) are required to register with the exchange.
“The exchange will appoint two Market Makers (MM1 & MM2) for Electricity Futures contract based on a competitive bidding procedure. The successful bidder shall be appointed as MM for a period of 6 months from the date of launch of LES on Electricity Futures,” it said.
The interested people must register with the exchange by July 2, it said.
In terms of incentives, Market Maker 1 will be eligible for a monthly incentive of ₹85 lakh, and Market Maker 2 will get ₹45 lakh provided they meet all quoting conditions.
Requirements to become a Market Maker (MM)
NSE specifies four criteria to become a market maker to trade in electricity futures:
1. Net worth of ₹5 crore.
2. No serious disciplinary action against the member in the last year.
3. Member should have algo registration in commodity derivatives segment.
4. The member (or group entity) must demonstrate a reasonable understanding, experience in or ownership of assets, companies, customers, or plants in at least one segment of electricity sector value chain, including generation, transmission, distribution, power trading, equipment supply, or Engineering, Procurement and Construction (EPC).
