Sebi comes out with directive on regulatory fee for BSE; stock tanks 19%

Leading stock exchange BSE is expected to shell out more regulatory fee after the markets watchdog Sebi asked the bourse to pay the fee based on the "notional value" of its options contracts rather than on the premium value.

Also, the exchange has been asked to remit the differential payment for past years with interest. Initial data provided by BSE suggest an outgo of Rs 165 crore plus GST by the exchange.

Reacting to the development, shares of BSE have slumped as much as 18.64 per cent to an intra-day low of Rs 2,612.0 on the NSE on Monday. Finally, the stock settled 13.31 per cent lower at Rs 2,783 on the NSE.

There could be an increase in the BSE's regulatory fee payments to Sebi due to the significant variance between the notional and premium values. This discrepancy arises from the calculation method, which involves multiplying the contract size by the underlying price.

Notional turnover represents the overall strike price of all contracts traded in derivatives, whereas premium turnover is the sum of premiums paid on all contracts traded. As the notional value exceeds the premium turnover, opting for notional turnover as the basis entails a higher fee outlay.

"BSE is hereby advised to pay the regulatory fee based on annual turnover to Sebi considering the notional value in case of options contract," the exchange said in a filing to the National Stock Exchange (NSE) on Friday.

Also, the exchange has been asked to pay the differential regulatory fee for the past periods along with an interest of 15 per cent per annum on the remaining unpaid amount. It has been directed to pay the amount within one month of the receipt of the letter, the filing noted.

The regulator's letter mentioned that since the introduction of derivative contracts, BSE has been paying the regulatory fee on "annual turnover" to the regulator considering premium value for option contracts, instead of the notional value.

The Sebi's circular on regulatory fee payment on "notional value" with regards to options contract is already in force since 2018-19 as NSE pays the charge on notional value, however, BSE has been paying the turnover fee on premium value.

In a disclosure on Sunday, BSE said it was evaluating the validity of the claim as per Sebi communication.

In case it is ascertained that the said amount is payable, the total differential Sebi regulatory fees for the period from FY 2006-07 to FY 2022-23 would be Rs 68.64 crore plus GST, which includes an interest of Rs 30.34 crore. Further, the differential Sebi regulatory fees for FY 2023-24, if liable, could be around Rs 96.30 crore plus GST, BSE said.

The markets watchdog had introduced the regulatory fee on recognised stock exchanges under the Sebi (Regulatory Fee on Stock Exchanges) Regulations 2006, whereby the exchanges are required to pay the fee to the board within 30 days of the conclusion of a financial year. The rate of regulatory fee was based on the annual turnover of the stock exchanges.