Shares of BSE Ltd climbed 10 per cent in Friday's trade after NSE deferred its decision to change weekly and monthly expiries of futures and options (F&O) trades to Mondays from Thursdays.
The stock rose 9.99 per cent to hit a high of Rs 5,152.75 as NSE said the implementation of its previous circular is deferred "until further notice in view of SEBI consultation paper."
Earlier on March 4, NSE had said that the circular would come into effect from April 4, 2025 and the expiry day for all existing contracts was to be revised to 'new expiry day' on April 3.
If SEBI's consultation papers are implemented later, NSE may have to stay with Thursday expiry and BSE with Tuesday expiry. This is seen abating concerns regarding BSE's potential loss of market share and impact on earnings due to NSE's proposed move.
"This is beneficial for BSE because its current expiry day is Tuesday and a shift in NSE expiry to Monday from April 25 was expected to impact BSE’s volumes. The implementation of this consultation paper will allow spaced-out days for both BSE and NSE," MOFSL said while suggesting a 'Buy' on BSE.
MOFSL explained that since BSE already has contract expiry on Tuesday, NSE will have to probably stick to Thursday expiry, which will result in a steady growth trajectory for BSE.
"With BSE expiry ahead of NSE, the benefit of time decay is expected to remain intact, and BSE’s market share gain story is expected to continue. Nevertheless, the concern about the implementation of the consultation paper on entity-level limits remains a risk," it said.
Post a circular in January, BSE and NSE had chosen Tuesday and Thursday as the expiry days for derivatives contracts on single stocks and indices. But NSE recently proposed to change the final settlement day to Monday. SEBI in its consultation paper noted that the monthly single stocks derivatives contracts on one of the exchanges expire mid-month, whereas monthly index derivatives contracts on these constituents expire in the last week of the month.
"Spacing out of expiry days through the week reduces concentration risk, and provides an opportunity to exchanges to offer product differentiation to market participants. At the same time, too many expiry days has the potential to revive expiry day hyperactivity, which could jeopardize investor protection and market stability," SEBI pointed out.
In said it is desirable to formalise the final settlement days for equity derivatives contracts across exchanges so that it gives predictability to market participants while avoiding any unwarranted shuffling of such days by the exchanges that may impact market integrity or orderly trading.
SEBI has therefore proposed that expiries of all equity derivatives contracts of an exchange will be uniformly limited to one of either Tuesdays or Thursdays.
This would provide optimal spacing between expiries across exchanges, while avoiding choice of either the first day of the week or the last day as an expiry day, it said,
SEBI proposed that every exchange would continue to be allowed one weekly benchmark index options contract, on their chosen day (Tuesday or Thursday).
"Besides benchmark index options, all other equity derivatives contracts, viz., all benchmark index futures, non-benchmark index futures / options, and all single stock futures / options will be offered with a minimum tenor of 1 month, and the expiry will be in the las tweek of every month on their chosen day (that is last Tuesday or last Thursday of the month)," SEBI proposed.
Besides, SEBI proposed that stock exchanges would now seek prior approval of SEBI for launching or modifying any contract expiry or settlement day.
BSE bonus shares
Meanwhile, BSE shares were also in the news as the exchange's board will be meeting on Sunday, March 30, to discuss a proposal on bonus shares. If declared, it would be the second bonus issue by the stock exchange since 2022.
The stock exchange, which is a consistent dividend payer, had announced bonus in the ratio of 2:1 in March 2022. It means if BSE shareholders already had one stock, they received two additional new shares and there total holding of shares jumped to three shares against one share earlier.