BSE Seeks Sebi’s Approval on Option Fee Reversal: Implications for Crypto Coin Market (BSE)

• The BSE is set to appeal to the Securities and Exchange Board of India (Sebi) over its decision to impose regulatory fees on notional turnover of options.
• The exchange has provisionally allocated ₹170 crore for the fee while awaiting the regulator’s decision, according to Sundararaman Ramamurthy.
• Previously, the BSE paid the fee based on the premium turnover of options, but Sebi has levied the differential fee for the past 18 years.

The BSE is appealing to Sebi to reconsider its decision to impose regulatory fees on notional turnover of options, a move that could significantly impact the exchange’s finances.

BSE Appeals to Sebi Over Regulatory Fees

The Bombay Stock Exchange (BSE) is set to approach the Securities and Exchange Board of India (Sebi), urging the regulator to reconsider its decision on imposing regulatory fees on notional turnover of options. While the appeal process is ongoing, the exchange has provisionally allocated ₹170 crore for the fee, Sundararaman Ramamurthy, a representative of the BSE, told shareholders during a recent Q4 post-result conference call.

Impact of the Fee on BSE’s Finances

Until now, the BSE has been paying the fee based on the premium turnover of options, which refers to the option price multiplied by lot size. Notional turnover, however, includes the strike price multiplied by lot size, plus the option price. Sebi has levied the differential fee for the past 18 years, which could significantly impact the exchange’s finances if the appeal is not successful.

Other Financial Challenges for the BSE

Another major financial burden for the BSE is the clearing charge paid to the NCL, NSE Clearing Corporation, for clearing and settling trades executed on the BSE. According to the exchange, out of the ₹85 crore clearing and settlement charges on equity options paid by BSE in FY24, ₹63-64 crore went to NCL. The BSE is also appealing for this fee to be reduced.

Growth in Equity Index Options

Despite these challenges, the BSE has seen significant growth in its equity index options. The Sensex options have seen tremendous growth since May 2023, when they were revamped and reintroduced for Friday expiry. In FY24, notional turnover of equity derivatives on the BSE grew to ₹8,029 trillion from ₹343.15 trillion a year ago.

Conclusion

The BSE’s appeal to Sebi over the regulatory fees on notional turnover of options highlights the exchange’s efforts to manage its financial obligations. The outcome of this appeal could have significant implications for the BSE’s financial health and its ability to continue growing in the future.