BSE Stock Price Falls Following Sebi’s Regulatory Fee Diktat

The Bombay Stock Exchange (BSE) is poised to face an augmented regulatory fee burden following the Securities and Exchange Board of India (SEBI)’s directive to calculate the fee based on the “notional value” of its options contracts rather than their premium value.

This directive has stirred a significant reaction in the market, evidenced by a sharp decline in BSE shares, plummeting by as much as 18.64 percent to an intra-day low of Rs 2,612 on the National Stock Exchange (NSE) on Monday.

Industry analysts foresee a surge in BSE’s regulatory fee payments to SEBI due to the substantial disparity between notional and premium values. This discrepancy emanates from the calculation methodology, which involves multiplying the contract size by the underlying price.

Notional turnover encapsulates the aggregate strike price of all contracts traded in derivatives, while premium turnover represents the total premiums paid on all traded contracts. Given that the notional value surpasses premium turnover, adopting notional turnover as the basis results in a higher fee outflow.

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In response to this development, BSE, in a filing to the NSE on Friday, acknowledged SEBI’s directive, affirming its intention to comply. The exchange has been instructed to remit the regulatory fee based on annual turnover to SEBI, factoring in the notional value for options contracts.

Moreover, BSE has been tasked with remunerating the differential regulatory fee for preceding periods, coupled with a 15 per cent per annum interest on the outstanding amount. It has been given a one-month timeframe to fulfill this obligation, as outlined in the filing.

If the determined amount is deemed payable, BSE estimates the total differential SEBI regulatory fees for the period spanning from fiscal year 2006-07 to fiscal year 2022-23 to amount to Rs 68.64 crore plus GST, inclusive of Rs 30.34 crore in interest. Furthermore, the potential differential SEBI regulatory fees for fiscal year 2023-24 could approximate Rs 96.30 crore plus GST, contingent upon liability, as disclosed by BSE.

This regulatory recalibration underscores the evolving landscape of market oversight and the intricacies involved in fee computation methodologies. As BSE navigates these regulatory waters, the impact on its financial performance and market positioning remains a focal point for stakeholders and market participants alike.

Source: Indian Express

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