BSE shares decline 18%, highest since listing over regulatory fee payment

For the first time since its listing, the BSE shares saw the biggest decline of about 18% on Monday after it was asked to pay the regulatory fee to market regulator SEBI. The regulatory fees is based on the annual turnover which is calculated from the 'notional value' of its options contracts.

Regulatory Fees

BSE that calculated the annual turnover based on the premium value for options contract will now have to pay the differential regulatory fee for the past period along with interest. Nominal value is determined by multiplying the number of underlying shares by the strike price of a share whereas premium value is the price in the market.

As per CNBC-TV18, BSE has been asked to pay a differential fee of Rs 165 crore, of which Rs 69 crore is from financial year 2007 to financial year 2023, and Rs 96 crore for financial year 2024. Similarly, MCX has also been asked to pay a differential fee of Rs 4.43 crore.

Brokerages' stance

Brokerages firm Jefferies in its note wrote, that derivatives make up for nearly 40% of financial year 2025 and 2026 profit estimates. The higher fees can impact its Earnings Per Share (EPS) by 15% to 18%.

"As derivatives volume growth remains ahead of estimates, price hikes and improved premium quality can fully offset the EPS impact," Jefferies wrote in its note.

The Brokerage has also downgraded the BSE stock to hold from its earlier rating of buy. The target price is cut to Rs 2,900 from Rs 3,000 earlier. BSE stock has risen over 400% in the last 12 months.

Also Watch: Tesla's shares drop below $150, wipes out yearly gains