Shares of India's BSE tumble as regulator demands higher fees

Shares of India's BSE (Bombay Stock Exchange) dropped 19 per cent on Monday, marking its worst day ever, after the country's markets regulator proposed a higher regulatory fee structure for options contracts.

Analysts warned that this could impact the exchange operator's profits.

Although BSE's stock recovered slightly to a 12.5 per cent decline, it remained the top loser on the Nifty mid-cap 100 index, which was up 0.3 per cent.

The Securities and Exchange Board of India (SEBI) directed BSE on Friday to pay the regulatory fee based on the annual turnover derived from the notional value of options contracts, along with differential payment for past years with interest.

Currently, the company calculates annual turnover based on the premium value for options contracts.

Similar directives were also issued to India's biggest commodity exchange, the Multi Commodity Exchange (MCX), over the weekend, with a demand of 17.7 million rupees (£168,974.91) for the past years.

Derivatives constitute about 40 per cent of BSE's profit for the financial years 2025 and 2026, and higher fees could reduce the overall earnings per share by 15 to 18 per cent, according to Jefferies analysts.

BSE stated that the total demand from SEBI amounted to 1.65 billion rupees (£15.759 million) and that it was evaluating the order.

The SEBI's move necessitated BSE to increase its transaction charges on options to counter the profitability impact, as stated by multiple brokerages.

Despite the day's fall, the exchange operator's shares have seen a 27.4 percent increase this year, outperforming the 9.6 percent gain in the mid-cap index.

(Reuters)