Shares of BSE Ltd are under pressure after RBI Governor Sanjay Malhotra indicated that the central bank would proceed with its proposed lending norms for proprietary trading from July 1.
BSE shares fell as much as 5.22%, and are currently trading 4.07% lower at Rs 3,872 apiece, as of 2:20 pm, while capital market shares like those of Angel One were trading 3.5% lower after the Governor's statement.
The RBI had deferred implementation of the rules from April to July following industry feedback. However, Malhotra said the central bank does not intend to push back the timeline further and will retain the requirement for 100% collateral backing on loans linked to proprietary trading activities.
For exchanges such as BSE, which has emerged as a major beneficiary of India's booming derivatives market, any moderation in trading activity could become a key monitorable.
The proposed framework is expected to increase capital requirements for brokers and proprietary trading desks by restricting leverage and tightening funding access. Market participants fear the move could reduce trading activity, particularly in the derivatives segment, while raising funding costs and lowering capital efficiency for prop trading firms.
Proprietary trading is estimated to account for roughly 40% of India's futures and options turnover. With both bank guarantee leverage and intraday funding flexibility curtailed, industry estimates suggest derivative trading volumes could decline by 15% to 20% over time, especially when combined with recent regulatory measures such as changes to securities transaction tax and reduced expiry frequencies.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.