BSE shares hit by Sebi's regulatory fee move

Agencies

BSE said on Friday that has directed the exchange to pay a regulatory fee based on annual turnover, taking into account the 'notional value' of the options contracts. BSE has been paying this fee considering the value of the options premium. The fee based on premium value is lower than that taking into account the notional value.

On Monday, BSE said that based on the premium turnover, the regulatory fee dues of ₹1.66 crore for FY24 have been paid. The differential fees for the year that is due to Sebi could be around ₹96.3 crore in addition to taxes.

EARNINGS IMPACT
BSE’s FY25-26 Earnings per Share (EPS) could be adversely impacted by 15-18% after the Sebi action, provided there is no change in transaction and clearing charges, said Deepak Jasani, Head of Research, HDFC Securities.

“BSE is likely to increase transaction charges but not by a lot since one of the key advantages to trade in BSE is the lower charges compared to NSE which would shrink,” said Jasani. “BSE currently charges 25% lower than NSE.”

BSE revived its derivatives segment in May 2023 by relaunching Sensex Futures and Options after repeated attempts to boost the segment in recent years. Trading activity in the exchange’s weekly Sensex contracts has attracted interest amid the heightened frenzy in equity derivative trading.

Analysts said higher volumes could help offset the increased regulatory fees.

“The derivative volumes that BSE is making after launching multiple contracts and this volume surge could partially offset the fees,” said Manish Chowdhury, Head of Research, StoxBox. “The exchange may also hike the transaction charges for its participants in future.”

Jasani said the increase in transaction changes by BSE would only partly offset the impact of the transaction changes.

MCX said on Saturday Sebi has asked it to regulatory fees on notional turnover instead of the premium turnover. The exchange is expected to pay a differential of 1.43 crore with an interest of Rs34 lakhs for the period between FY17-18 to FY22-23. For FY23-24, the commodity exchange has been directed to pay 2.66 crore as the differential amount as regulatory fees.

Jasani said such a directive to BSE and MCX was in the offing as NSE was already paying the regulatory fees on the notional turnover.

“MCX has so far limited option trading and so didn’t witness any large impact on its stock price,” said Jasani.

BSE shares have surged 427.8% in the past year against an upmove of 25% in the Nifty.

SHARE OUTLOOK
Chowdhury said BSE shares may not fall further in a big way after the decline on Monday

“Investors can use the dip as a buying opportunity as BSE shares are not likely to fall much from current levels and the day’s low can be treated as a stop loss,” said Chowdhury.

Jasani remains optimistic on the bse stock with a target price of 3,100.

“The major impact of the action was done today, so no large movement is likely to follow from here on based on this trigger,” said Jasani.