BSE Faces Earnings Risk as SEBI’s Expiry-Day Shift May Hit Derivatives Volumes
BSE shares drop 6% as SEBI approves expiry day swap for equity derivatives. Analysts warn of an 8% earnings hit as trading volumes may decline post-change
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Shares of BSE Ltd fell by nearly 6% on Tuesday, following a crucial decision by market regulator SEBI that could significantly impact the exchange’s earnings from derivatives trading.
SEBI has approved a shift in the weekly expiry schedule for equity derivatives across exchanges, assigning Tuesday to the National Stock Exchange (NSE) and Thursday to the Bombay Stock Exchange (BSE). The new rule will come into effect from September 1, 2025.
Why the Change Matters
Currently, over 40% of BSE’s index options volumes occur on Tuesdays, making it the most active day for the exchange. With NSE now taking over Tuesday expiries, analysts expect BSE’s derivatives trading volumes to drop by up to 13%, leading to a potential 8% dip in earnings.
Derivatives form a major portion of BSE’s revenues, contributing nearly 60%. The loss of a key expiry day is expected to reduce market share as traders may migrate to NSE, where expiry-driven activity is likely to consolidate.
SEBI’s Broader Regulatory Intent
This move is part of SEBI’s broader effort to reduce excessive speculation in derivatives. In October 2023, the regulator restricted each exchange to a single weekly options contract. Under the new guidelines, expiry days must be either Tuesday or Thursday, and exchanges must seek SEBI’s approval for any changes.
What’s Next for BSE?
The BSE will retain its current expiry schedule until August 31. From September, it must switch to Thursday expiries, as per the new rule.
Although the BSE has been growing rapidly in the derivatives space, the new expiry framework could slow its momentum. The exchange may need to develop alternative strategies to retain traders and boost volumes on Thursdays.
