BSE shares tumbled 19% today on Sebi order. Here's why

Shares of stock exchange BSE Ltd crashed 19 per cent in Monday's trade after the market regulator Sebi asked it to pay regulatory fee on annual turnover fee considering 'notional value' in the case of option contracts. Sebi said BSE has been paying regulatory fee on annual turnover, considering only the premium value for option contracts.

Sebi further advised BSE to pay the differential regulatory fee for past periods, along with applicable interest of 15 per cent per annum on the amount remaining unpaid or belatedly paid or short paid for every month of delay.

"Our sensitivity suggests that BSE PAT estimates for FY25/26E can decline by ~20% basis this cost rise, but it can be managed by 30 per cent price hike on an aggregate level. However, this sensitivity is subjective to estimates and has many levers of options volume growth, options cost growth and also development in premium to notional turnover," ICICI Securities said.

Following the development, the stock plunged 18.63 per cent to hit a low of Rs 2,612.10 on NSE.

BSE said it was evaluating the validity, or otherwise, of the claim as per SEBI communication. "In case, if it is ascertained that the said amount is payable, then the total differential SEBI regulatory fees for the past periods i.e. from FY 2006-07 to FY 2022-23, would be approximately Rs 68.64 crore plus GST which includes interest of Rs 30.34 crore," BSE said in a filing to NSE.

With Sebi instructing the payment on notional turnover basis, there will be higher cost burden for BSE and MCX, but BSE will likely suffer the most due to the quantum of its notional turnover and its lowest ratio of premium to notional, ICICI Securities said.

BSE said the due date for payment of SEBI regulatory fee for FY24 is April 30, amount payable as per premium (turnover) was Rs 1.66 crore plus GST, which has been paid by the company. The differential SEBI regulatory fees for the year, if liable, could be around Rs 96.30 crore plus GST, it noted.

Stock exchanges are required to pay regulatory fee to the board within a period of 30 days of conclusion of financial year. The rate of regulatory fee is based on annual turnover of a stock exchange. The term 'annual turnover mean the aggregate value of transactions, which took place in the financial year.

Sebi said the 'annual turnover' for options contracts is computed on the basis of notional value of the option contracts for the purpose of payment of regulator fee.Sebi said the regulatory fee paid by BSE for FY2006-07 was for a quarter rather than for the full financial year. Since the introduction of derivatives contracts, BSE -- including the erstwhile United Stock Exchange which got merged with BSE in FY15, has been paying regulatory fee on annual turnover, considering only the premium value for option contracts instead of notional value.