Shares of BSE Ltd saw a sharp decline of over 18% during Monday’s trading session, following a directive from the market regulator Securities and Exchange Board of India (Sebi) regarding regulatory fees on options contracts.
The market regulator instructed BSE to pay regulatory fees based on the ‘notional value’ of option contracts, rather than just the premium value.
This change prompted Sebi to advise BSE to make up for any shortfall in past payments, along with a 15% per annum interest on any outstanding amounts.
As a result of this development, BSE’s stock plummeted by 18.63% to reach Rs 2,612.10 on the National Stock Exchange (NSE).
At 10.40 am, shares of BSE were down 12.28% at Rs 2,816 apiece.
In response, BSE stated that it was assessing the validity of Sebi’s directive. “In case, if it is ascertained that the said amount is payable, then the total differential SEBI regulatory fees for the past periods i.e. from FY 2006-07 to FY 2022-23, would be approximately Rs 68.64 crore plus GST which includes interest of Rs 30.34 crore,” BSE said in a filing to NSE.
BSE stated that the deadline for paying the Sebi regulatory fee for FY24 was April 30. The amount payable, calculated based on premium turnover, was Rs 1.66 crore plus GST, and the company has already settled this amount.
However, if liable, the differential SEBI regulatory fees for the year could be approximately Rs 96.30 crore plus GST, BSE noted.
According to regulatory norms, stock exchanges are required to pay regulatory fees to Sebi within 30 days of the conclusion of the financial year. The fee is determined based on the annual turnover of the exchange, defined as the aggregate value of transactions throughout the year.
Sebi clarified that for options contracts, the ‘annual turnover’ is calculated based on the notional value of the contracts, rather than the premium value alone.
It highlighted that BSE had paid regulatory fees for FY2006-07 for a quarter instead of the full financial year.
Since the introduction of derivatives contracts, BSE has been paying regulatory fees based solely on the premium value of option contracts, rather than the notional value, including those of the erstwhile United Stock Exchange, which merged with BSE in FY15.
