Synopsis:
BSE plunged sharply following news that SEBI plans to release a Consultancy Paper on ending Weekly F&O Contracts and shifting to Monthly contracts, which could significantly impact BSE’s revenue.
The shares of Asia’s oldest stock exchange fell over 4 percent on Thursday after the SEBI made a potential move in shifting the expiry. In this article, we will dive more into the details.
With a market capitalization of Rs 89,007 crore, the shares of BSE Ltd made a day low of Rs 2,170 per share, down by 4 percent from its previous day closing price of Rs 2,266.50 per share. Over the past five years, the stock has delivered a multibagger return of 3,625 percent.
About the announcement
According to reports, within the next month, it is expected that the Securities and Exchange Board of India (SEBI), which is the market regulator, will release a consultation paper for public comment regarding the stoppage of new weekly F&O contracts.
Earlier, SEBI Chairman Tuhin Kanta Pandey had indicated his willingness to consider the launch of longer-tenor derivative products, and this means that the regulator is now moving towards a change from weekly to monthly expiries, with a gradual reduction of the number of weekly expiries gradually phased out. By this, the exchange will probably get a uniform same-day expiry.
SEBI is expected to present its proposal to the board on the 12th of September and will then start talks with the exchanges next week. Such a consultation paper will also lead to suggestions to limit participation in F&O by the retail traders to avoid excessive participation by them, and also propose measures for encouraging trading in the cash market by volume.
BSE might see its surge in derivatives volumes go down if the board decides to stop weekly F&O contracts. The reason behind this is that the traders were actively utilizing the Thursday expirations to move from the NSE.
The absence of weekly contracts may lower the level of activity driven by retail investors and, thus, hurt the local market and short-term revenue. Nevertheless, the change to monthly contracts and more rigid regulations could potentially bring in a larger number of institutional investors, consequently making BSE’s derivatives business more stable and trustworthy over time.
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Financial Highlights
BSE reported a consolidated revenue of Rs 3,212 crores in FY25, up 101.66 percent from Rs 1,592 crores in FY24. The company reported a net profit of Rs 1,322 crores in FY25, up 71.24 percent from Rs 772 crores in FY24.
BSE Limited provides a platform for trading in equities, currencies, debt, derivatives, mutual funds, and other securities on both domestic and international platforms. The company also offers services in clearing and settlement, data dissemination, depository, IT, training, and supervision of SEBI-registered investment advisers. BSE has a platform to support small and medium enterprises
Written by Satyajeet Mukherjee
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