BSE to appeal Sebi on option fee reversal

Mumbai: The BSE will be approaching the Securities and Exchange Board of India (Sebi), urging it to reconsider its decision on imposing regulatory fees on notional turnover of options. 

However, while the process is ongoing, the exchange has allocated 170 crore as a provision for the fee, until the capital market regulator decides on its appeal, Sundararaman Ramamurthy told shareholders during the Q4 post-result conference call on Wednesday.

“…we will be requesting and representing, and submitting and appealing to the regulator to reconsider this decision, and are very hopeful that we will be heard by the regulator. And, if it happens it will be really good.”

Until now, the BSE has been paying the fee based on the premium turnover of options. Premium turnover refers to the option price multiplied by lot size. Notional turnover, on the other hand, includes the strike price multiplied by lot size, plus the option price. Sebi has levied the differential fee for the past 18 years.

Other charges

The other major drag on the profits of the exchange is the clearing charge paid to the NCL, NSE Clearing Corporation, for clearing and settling trades executed on the BSE, Ramamurthy said. 

According to the exchange, out of the 85 crore clearing and settlement charges on equity options paid by BSE in FY24 , 63-64 crore went to NCL. “We are also appealing that this should be reduced.”

However, earlier, NSE’s managing director and chief executive, Ashishkumar Chauhan, had said that the clearing corporation (NCL) charges NSE and BSE the same fee for clearing and settlement of trades on either exchange.

The equity index options—Sensex options—have seen tremendous growth since May 2023, when they were revamped and reintroduced for Friday expiry.

In FY24, notional turnover of equity derivatives on the BSE grew to 8,029 trillion from 343.15 trillion a year ago. The comparitive figures on the NSE were 79,928 trillion and 38,223 trillion for the period under consideration.

The BSE also launched Bankex options last October, which expires every Monday, besides monthly single stock futures contracts. which will expire on the second Thursday of a month, effective 1 July 2024.

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Published: 09 May 2024, 10:16 PM IST

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