Shares of BSE surged by 8% to Rs 4,161 on Thursday, following the announcement of new regulations by the Securities and Exchange Board of India (Sebi) aimed at the futures and options (F&O) market. This increase is attributed to BSE’s anticipated competitive advantage over its larger rival, NSE, due to the new framework that limits weekly derivatives contracts to one benchmark index per exchange, effective from November 20, 2024.
The introduction of Sebi’s new rules will allow BSE to have three additional expiry days for its derivatives contracts, enhancing its ability to compete with NSE, which currently offers expiry on all weekdays except Friday, as it’s expected to significantly boost BSE’s trading volumes in the derivatives marke.
NSE may experience a more substantial impact on its option premium turnover, potentially decreasing by up to 40%, compared to a 20% decline expected for BSE as analysts predicted a likely benefit from these changes to BSE.
Beyond derivatives trading, BSE has diversified revenue streams including colocation services and new product offerings in commodities and power trading as they aim to create a buffer against potential declines in trading volumes due to the new regulations.
The strong rise in BSE shares reflects investor optimism about the exchange’s capacity to adapt and leverage its other revenue sources amid regulatory changes. Motilal Oswal Financial Services has indicated that BSE will be “relatively less impacted” than NSE due to these developments.
While BSE shares rallied, other brokerage firms showed mixed results. For instance, Angel One saw a gain of 7%, while others like IIFL Securities and Geojit Financial remained flat or declined slightly.