The BSE’s Staggering 17% Plummet: What’s Behind the Biggest Single-Day Drop Since Listing?
Today, the share price of the Bombay Stock Exchange (BSE) dropped by more than 17% in morning trading, marking its largest single-day decline since its listing. This decline is linked to a demand from India’s market regulator, SEBI (Securities and Exchange Board of India), for BSE to pay higher regulatory fees for derivatives trading. SEBI is now requiring BSE to calculate these fees based on the notional turnover of derivatives, rather than just on the premiums collected.
According to analysts at Jefferies India, this change could significantly impact BSE’s earnings because derivatives contribute about 40% to BSE’s estimated net profits for the financial years 2025 and 2026. They estimate that this fee adjustment could reduce BSE’s earnings per share by 15-18%.
BSE explained that it had been calculating its annual turnover for regulatory purposes based on the premium values of options contracts. Now, with SEBI’s new requirement, BSE is facing a substantial increase in its regulatory fees.
BSE disclosed that it must pay SEBI the total regulatory fees owed, along with 15% interest. This includes an amount of approximately ₹68.64 crore plus GST for past periods dating from the financial year 2006-07 to 2022-23, which also includes interest of ₹30.34 crore. Additionally, for the financial year 2023-24, BSE has already paid approximately ₹1.66 crore plus GST based on premiums, with the potential for an additional ₹96.30 crore plus GST if the new calculation is deemed applicable.
In simpler terms, BSE’s share price dropped significantly due to SEBI’s demand for higher regulatory fees on derivatives trading, calculated on notional turnover rather than premiums. This change could have a substantial impact on BSE’s earnings, especially from derivatives, affecting its overall financial performance.
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