BSE to shell out more as regulatory charge to Sebi

The BSE faces a larger outgo after regulatory clarity on the fee to be paid to the Securities and Exchange Board of India (Sebi) as a turnover charge on options volume.

The market regulator on Friday directed the exchange to pay a regulatory fee on the 'notional value' of annual turnover.

"BSE is further advised to pay the differential regulatory fee (including differential regulatory fee, if any) for the past periods along with applicable interest (i.e. 15 per cent per annum on the amount remaining unpaid or belatedly paid or short paid, for every month of delay or part thereof to the Board) within a period of one month from the date of receipt of this letter,” said Sebi in a letter to the BSE.

The market regulator levies 0.0001 per cent of the price at which the securities are purchased or sold as a turnover fee which comes to be at Rs10 per crore.

People familiar with the matter said that the rival bourse National Stock Exchange (NSE) had written a letter to the market regulator seeking clarity on the calculation of the turnover fee, whether it is to be done on the notional or premium turnover.

Notional turnover refers to the total strike price of each contract traded in the derivatives, while the premium turnover is the total of the premium paid on all contracts traded.

The notional value is always higher than the premium turnover, thus a higher outgo as a fee if the notional turnover is kept as the base.

While the NSE pays the charge on notional value, the BSE has been paying the turnover fee on premium value, said a person with direct knowledge of the matter.

“The NSE has been paying the same. However, it will be a worry for the BSE as it pays the fee on premium turnover.

"The exchange may have to pay about Rs100 crore to Sebi as a regulatory fee,” said a source seeking anonymity.

Emailed queries sent to the BSE and Sebi remained unanswered.

According to data from the exchanges, the BSE recorded a notional turnover of Rs 1,519 trillion in March for index options while its premium turnover stood at Rs 0.98 trillion.

For the NSE, the notional turnover for Index Options in March was Rs7,097 trillion and the premium turnover was Rs 1.1 trillion.

The BSE has gained market share since last year when it relaunched its index derivatives Sensex and Bankex.

The exchange’s revenue from transaction charges also surged to Rs 166 crore in the quarter ended December 2023 from Rs  63 crore a year ago in the corresponding period.