April 29, 2023
New Delhi, India
BSE Ltd witnessed a significant decline of over 18% in its shares during Monday’s trading session due to a directive from the Securities and Exchange Board of India (SEBI) regarding regulatory fees on options contracts. Here’s an analysis of the situation.
SEBI Directive Impact:
SEBI’s directive had a significant impact, particularly on the Bombay Stock Exchange (BSE), as it required them to recalibrate their regulatory fee calculations for option contracts, taking into account the ‘notional value’ rather than solely the premium value. This move compelled the BSE to address any deficiencies in previous payments, coupled with the imposition of a 15% per annum interest rate on any outstanding amounts.
Market Reaction:
- BSE Shares plummeted by 18.63% to reach Rs 2,612.10 on the National Stock Exchange (NSE) following the announcement.
- At 10.40 am, shares of BSE were down 12.28% at Rs 2,816 apiece.
BSE’s Response:
- BSE stated that it was evaluating the validity of SEBI’s directive and estimated the potential financial impact.
- If found liable, BSE may need to pay approximately Rs 68.64 crore plus GST for past periods, along with potential additional fees of Rs 96.30 crore plus GST for FY24.
Regulatory Norms:
- Stock exchanges are mandated to pay regulatory fees to SEBI within 30 days of the conclusion of the financial year, based on their annual turnover.
- SEBI clarified that for options contracts, the ‘annual turnover’ should be calculated based on the notional value of contracts, not just the premium value.
Historical Context:
- BSE had historically paid regulatory fees based solely on the premium value of option contracts, neglecting the notional value, even after the merger with the erstwhile United Stock Exchange in FY15.
Closure:
The significant decline in BSE Shares underscores the impact of regulatory directives on market sentiment and financial performance. BSE’s response indicates ongoing assessment and potential financial implications, highlighting the need for clarity and compliance with regulatory norms.
At the time of writin this article, BSE Shares were trading at 2770.85 INR down −439.50(−13.69%).
Disclaimer:
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