NSE to levy fee on multi-leg orders in currency derivatives

The exchange will start charging for multi-leg order entry facility from August 1

To ensure fair trading activity in currency derivatives segment, National Stock Exchange will start levying charges on multi-leg order entry facility that allows members to place multiple orders at one go.

The move also comes at a time when regulators and exchanges are keeping a close tab on currency derivative trading to deal with any possible excessive volatility.

A multi-legged order can have at least two order legs.

"In order to facilitate and encourage fair usage of such order entry facility. Charges will be levied for 2 Leg and 3 Leg orders in currency derivatives segments," NSE said in a circular.

The facility allows a trader to place a combination order across different derivative contracts.

The exchange would start charging for multi-leg order entry facility from August 1.

Charges would be based on the basis of order execution efficiency -- the ratio of number of trades resulting from 2L/3L orders and total number of orders.

For more than 90 per cent execution efficiency, the exchange will not levy any fee.

A fee of Rs 0.01 will be levied on each 2L/3L order for execution efficiency between 70 per cent and 90 per cent and the same will be Rs 0.02 and Rs 0.03 for execution efficiency ranging 50 per cent and 70 per cent and less than 50 per cent respectively.

"For the purpose of calculation, all 2L/3L orders, i.E., order entry, order modifications and order cancellations shall be considered," NSE said.

"The charges shall be computed on a daily basis and will be collected by a debit to the Exchange dues account of the respective members on monthly basis only if the amount is equal to or greater than Rs 100 for a particular month," it added.

The exchange has provided a multi-leg order entry facility in currency derivatives segments through which members can place combination orders such as 2 Leg and 3 Leg which are immediate or cancel (IOC) in nature. This facility enables members to place through a single entry, orders for multiple contracts in the normal order book for IOC matching.