The Australian Securities Exchange will introduce a new exchange-traded fund and exchange-traded commodity market making rebate scheme from 1 August 2010.
The new scheme will cover all ETFs and ETCs except those categorised by ASX as mature.
Currently only two products are deemed by ASX to be mature – STW and GOLD.
Interested trading participants will have a choice of becoming either an advanced market maker or regular market maker. Advanced market makers will be contracted to make markets on a tranche of ETF and ETC products whereas a regular market maker will have the option to pick which products they would like to be appointed to.
ASX has established a range of ETF/ETC market maker schedules that stipulate the spread and volume requirements for market making in ETFs/ETCs on that schedule.
ASX, the ETF/ETC issuers and market makers will agree which ETFs/ETCs are allocated to which schedule. This decision will take into account the nature of the ETF/ETC and the liquidity of its underlying securities from an Australian market making perspective.