Broking stocks end mixed after Sebi's new F&O framework tightening

Shares of other listed brokerages fell as investors digested the impact of the stricter trading rules

Shares of BSE, the only listed equity bourse, rose 3 per cent, while those of Angel One, a leading discount broker, jumped 4.5 per cent, even as market regulator Securities and Exchange Board of India (Sebi) announced tighter derivatives trading rules, which are seen making a dent in volumes.

However, shares of other brokerage firms like 5Paisa, IIFL Securities, ICICI Securities, MOFSL, and Aditya Birla Capital declined in the range of 2 per cent to 4 per cent. Shares of ICICI Securities fell 2.3 per cent, 5paisa Capital slumped 2.9 per cent, Aditya Birla Money declined 3.5 per cent and Geojit Financial Services dipped 1.7 per cent.

 

The gains in BSE and Angel One came as analysts’ reports suggested less-than-anticipated impact on their earnings and ways to mitigate the impact of the new norms.

Sebi has introduced higher entry barriers and increased margin requirements along with a slew of other measures to keep the rising retail frenzy in the futures & options (F&O) market in check.

Analysts and market experts expect a clearer picture from after November 20 when the majority of the changes kick in. However, they anticipate BSE to be less impacted than the market leader- National Stock Exchange (NSE).

Shares of BSE closed 3 per cent, up at Rs 3,980 apiece after rallying as much as 8 per cent in intraday trade. BSE has only two products with weekly expiry compared to four from NSE.

“We believe NSE’s Option premium turnover could get impacted up to 40 per cent; while that of BSE by 20 per cent. However, given the recent tariff increase, the impact on earnings would be lower – we estimate 20 per cent impact for NSE and 5 per cent for BSE on FY26ii EPS (full year impact),” IIFL Securities noted in its report.

The report added that the likely impact on revenues for NSE would be around 30 per cent, but for BSE, it will be around 10-12 per cent.

Shares of Angel One also rallied more than 7 per cent in the day, but closed after cooling down to a gain of 4.5 per cent at Rs 2,716 per share.

Brokerage house Motilal Oswal Financial Services (MOFSL) maintained a ‘Buy’ rating on Agnel One.

“Our sensitivity analysis yields nil earnings impact for Angel One in FY26 if the order volumes are down 10 per cent versus our assumption of 16 per cent growth and the company is able to increase its realisation from Rs 19.7 to Rs 25,” said the report by MOFSL.

Leading discount broker Zerodha also may consider revising its charges once the norms kick in.

"As things stand, assuming that those trading weekly don't move on to trading monthly, the impact will be around 60% of overall F&O trades and around 30 per cent of our overall orders. I guess things will become much clearer from November 20. We will then decide on our change in pricing structure, based on the impact on the business," wrote Nithin Kamath, founder, Zerodha on his social media accounts.

Following the Sebi announcement, Jefferies has pointed out that the changes may induce trading behaviour changes for both individual and institutional participants, but the impact will be felt more on the retail-focused discount brokers.

“Traditional brokers should see relatively lower impact as the lower margin hikes aid their HNI client base (which tend to have a higher mix of option sellers). Clearing members like Nuvama Asset Services that cater to institutional players (HFTs / FPIs) will have marginal impact, if any. Other market participants like AMCs, wealth managers and depositories remain unaffected,” said Jefferies.