![BSE Shares Decline 17% After Sebi Order; Biggest Single-Day Decline Since Listing](https://newshaq.com/wp-content/uploads/2024/04/1280px-bse_building_at_dalal_street-660_10-sixteen_nine.jpg)
Key Points
- BSE's share price drops 17% after SEBI's directive.
- SEBI instructs BSE to pay regulatory fees based on notional value of options contracts.
- Analysts estimate demand for higher fees could reduce BSE's earnings per share by 15-18%.
- BSE evaluating validity of SEBI's claim; total differential regulatory fees could amount to Rs 68.64 crore plus GST.
- Jefferies downgrades BSE's stock rating; higher regulatory fee could limit short-term growth potential.
- BSE exploring strategies to mitigate negative impact on financials.
- Despite challenges, BSE remains optimistic about future prospects.
Introduction
- Bombay Stock Exchange (BSE) experiences a 17% drop in share price.
- This follows a directive from Securities and Exchange Board of India (SEBI).
SEBI's Directive
![](https://www.livemint.com/lm-img/img/2024/02/08/1600x900/Sebi_1707411400672_1707411400992.jpg)
- SEBI instructs BSE to pay regulatory fees based on notional value, not premium value.
- Notional turnover refers to total strike price of each contract traded in derivatives.
- Premium turnover refers to total premium paid on all contracts traded.
- SEBI demands total regulatory fees with 15% interest based on annual turnover, considering notional value of options contracts.
Financial Impact
![](https://assets.upstox.com/content/assets/images/news/business-1730089_1280-(3)_67531.png)
- Analysts estimate demand for higher fees could reduce BSE's earnings per share by 15-18%.
- Derivatives contribute around 40% of BSE's estimated net profits for FY25 and FY26.
BSE's Response
- BSE is evaluating the validity of SEBI's claim.
- Total differential regulatory fees from FY 2006–07 to 2022–23 could amount to approximately Rs 68.64 crore plus GST, including Rs 30.34 crore in interest.
- For FY24, regulatory fee payment due on April 30, 2024.
- BSE has already paid premium-based fee of approximately Rs 1.66 crore plus GST but may owe additional Rs 96.30 crore plus GST if found liable.
Market Impact
- Jefferies downgrades BSE from "Buy" to "Hold" and reduces target price for BSE's stock to Rs 2,900 from Rs 3,000.
- Higher regulatory fee could limit BSE's short-term growth potential.
- SEBI's directive might reduce BSE's EPS by 15-18%.
Future Strategies
- BSE exploring strategies like potential price hikes and improvements in premium quality.
- Aim to mitigate negative impact on financials while maintaining market position and regulatory compliance.
Overview :
- Despite challenges, BSE remains optimistic about future prospects.
- Will navigate challenges while ensuring regulatory compliance and market stability.