 "BSE tanks 19% on Sebi's diktat on turnover charges on option volume")
Shares of BSE Limited tanked 19 per cent on the National Stock Exchange (NSE) in Monday's intra-day trade amid heavy volumes after the market regulator on Friday directed the exchange to pay a regulatory fee on the 'notional value' of annual turnover. The stock had hit a record high of Rs 3,264.70 on April 24, 2024.
BSE is liable to pay Total Regulatory Fees along with 15 per cent interest, to the Securities and Exchange Board of India (Sebi) based on Annual Turnover considering “Notional Value” in case of Option Contract.
"BSE is further advised to pay the differential regulatory fee (including differential regulatory fee, if any) for the past periods along with applicable interest (i.e. 15 per cent per annum on the amount remaining unpaid or belatedly paid or short paid, for every month of delay or part thereof to the Board) within a period of one month from the date of receipt of this letter,” said Sebi in a letter to the BSE. CLICK HERE FOR FULL DETAILS
Notional turnover refers to the total strike price of each contract traded in the derivatives, while the premium turnover is the total of the premium paid on all contracts traded. The notional value is always higher than the premium turnover, thus a higher outgo as a fee if the notional turnover is kept as the base.
While the NSE pays the charge on notional value, the BSE has been paying the turnover fee on premium value, the Business Standard reported quoting a person with direct knowledge of the matter.
Meanwhile, the BSE said it was currently evaluating the validity, or otherwise, of the claim as per SEBI communication.
In case, if it is ascertained that the said amount is payable, then the total differential SEBI regulatory fees for the past periods i.e. from FY 2006-07 to FY 2022-23, would be approx Rs 68.64 crore plus GST which includes interest of Rs 30.34 crore, BSE said. CLICK HERE FOR DETAILS
More From This Section
According to media reports, the brokerage firm Jefferies downgraded the BSE to 'Hold' from 'Buy' and cut target price to Rs 2,900 from Rs 3,000, citing higher regulatory fee limits near-term upside.
According to analyst at HDFC Securities, the shift from premium to notional is a regulatory setback and BSE will have to pay a regulatory fee of ~Rs 1/2.5/3.1 billion, which is ~13/21/22 per cent of FY24/25/26E adjusted profit after tax (APAT).
Another way to offset the impact of higher regulatory fees is to increase the transaction charges by ~25 per cent and reduce clearing charges by ~10 per cent, which will reduce the impact to only -5/-2 per cent for FY25/26E. The exchanges earn revenue on the premium, which is only 6/19bps of the notional value, and the payment of the regulatory fees will be on the notional turnover. NSE has been paying the regulatory fees based on the notional turnover, the brokerage firm said in a stock update.
“We have not changed our estimates and will wait for more clarity. We expect a revenue/EPS CAGR of ~34/42 per cent over FY24-26E, led by a revival in transaction revenue,” HDFC Securities said.
At 09:44 am; BSE was trading 17 per cent lower at Rs 2,677.95, as compared to 0.27 per cent rise in the Nifty 50. As many as 3.09 million equity shares have changed hands on the NSE. Despite today's sharp decline, in the past one year, the stock price of BSE has zoomed 415 per cent, as against the 23.74 per cent rally in the benchmark index.