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Addl regulatory fee norm hits BSE

Sebi directs Asia’s oldest stock exchange to pay regulatory fee on notional value of options than premium value; Scrip falls 19%

Addl regulatory fee norm hits BSE
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New Delhi: Leading stock exchange BSE is expected to shell out more regulatory fee after the markets watchdog Sebi asked the bourse to pay the fee based on the ‘notional value’ of its options contracts rather than on the premium value. Also, the exchange has been asked to remit the differential payment for past years with interest. Initial data provided by BSE suggest an outgo of Rs165 crore plus GST by the exchange.

The stock plummeted 18.63 per cent to Rs2,612.10 during the day on the NSE. Later, it ended at Rs2,783 apiece, down 13.31 per cent.

“Shares of BSE plunged more than 13 per cent after Sebi asked the exchange to pay the regulatory fee based on the notional value of its options contracts and not based on the premium value,” said Avdhut Bagkar, Technical and Derivatives Analyst at StoxBox. About 112.45 lakh shares of the exchange were traded on the NSE during the day. The exchange’s market valuation stood at Rs37,675.24 crore.

There could be an increase in the BSE’s regulatory fee payments to Sebi due to the significant variance between the notional and premium values. This discrepancy arises from the calculation method, which involves multiplying the contract size by the underlying price. Notional turnover represents the overall strike price of all contracts traded in derivatives, whereas premium turnover is the sum of premiums paid on all contracts traded. As the notional value exceeds the premium turnover, opting for notional turnover as the basis entails a higher fee outlay.

“BSE is hereby advised to pay the regulatory fee based on annual turnover to Sebi considering the notional value in case of options contract,” the exchange said in a filing to the National Stock Exchange (NSE) on Friday.

Also, the exchange has been asked to pay the differential regulatory fee for the past periods along with an interest of 15 per cent per annum on the remaining unpaid amount. It has been directed to pay the amount within one month of the receipt of the letter, the filing noted. The regulator’s letter mentioned that since the introduction of derivative contracts, BSE has been paying the regulatory fee on “annual turnover” to the regulator considering premium value for option contracts, instead of the notional value. The Sebi’s circular on regulatory fee payment on “notional value” with regards to options contract is already in force since 2018-19 as NSE pays the charge on notional value, however, BSE has been paying the turnover fee on premium value.

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