BSE Share Price Rises As New SEBI F&O Norms Level Playing Field

BSE Ltd. share price surged nearly 10% on Thursday after the market regulator announced measures to curb trading in equity derivatives.

The Securities and Exchange Board of India on Tuesday, after market hours, announced new norms limiting index options contracts with a weekly expiry to one per exchange as one of several key measures to promote investor protection and market stability.

At present, the NSE offers four index options contracts with a weekly expiry, while the BSE offers two.

The measures, which also include raising the contract value to Rs 15 lakh from the current range of Rs 5-10 lakh, could lead to a drop in volumes by as much as 50%, sources told NDTV Profit. As options for placing trades in equity derivatives become more limited and expensive, exchanges may see a downward revision in their earnings.

"For BSE, we have recently cut our EPS by [approximately] 10% assuming discontinuance of Bankex product and focus will remain on volume impact on continuing product (Sensex) post implementation of new regulations," Jefferies said in a note dated Oct. 1.

BSE's share in average daily traded volumes among derivatives stood at 9.1% for the financial year ended March 2024, with the majority being commanded by the NSE.

The impact of these measures will be much greater for NSE's revenue, according to Aditya Agarwala, co-founder and director at invest4Edu Pvt.

"While the NSE will continue to command a greater share of volumes, BSE's share has been on a rising trend and might continue to do so," he said, stating that as weekly volumes shift amid the two indices chosen by the exchanges, BSE could stand to benefit.

BSE share price rose as much as 9.74% to an intraday high of Rs 4,235 apiece, before cooling off to a rise of 3.76% at Rs 4,004.1 by 1:39 p.m. Meanwhile, the benchmark NSE Nifty 50 was trading 1.94% lower at 25,296.65.

The stock has gained 80.61% in the year-to-date and 209% in the past twelve months. Total traded volume in today's session stood at 3.44 times the 30-day average. RSI for the counter was 70.83, indicating the it was creeping into the overbought territory.

Four out of the seven analysts tracking the company have a 'buy' rating on the stock, two suggest a 'hold' and one has a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 29.9%.