Share price of BSE Ltd. fell over 6% on Wednesday following the announcement of a shift in the expiry day for stock derivatives to Thursday. This decision is anticipated to negatively impact the exchange's trading volumes and profitability.
Brokerage firms have revised their earnings per share estimates for BSE Ltd., citing concerns over the potential decline in trading activity. The Securities and Exchange Board of India has designated Tuesday as the expiry day for stock derivatives on the National Stock Exchange, leaving Thursday for BSE. This change will be implemented starting September.
Currently, BSE benefits from three trading days, while NSE has two, according to UBS Global Research. The upcoming reversal is expected to reduce BSE's trading volumes by 10-15%, which could lead to a 5-6% decrease in profitability.
Jefferies noted that if BSE can enhance liquidity in long-term contracts and introduce a common contract, the adverse effects might be mitigated. The shift in expiry day may slightly impact volumes, but there is potential to minimise the impact. Market participant interactions suggest a 5-10% impact, the brokerage stated.
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