BSE shares soar 16% as NSE defers Monday expiry plans amid SEBI's consultation paper

Jefferies suggested the move eases concerns about BSE’s market share loss.

Shares of Asia's oldest bourse BSE settled a whopping 16 percent higher on March 28, after its competitor National Stock Exchange Ltd. (NSE) decided to defer its plan on shifting the weekly, monthly, and quarterly derivatives expiry day to Monday, from Thursday.

NSE's move to defer its plan to switch expiry days came after the markets regulator Securities and Exchange Board of India (SEBI) released a consultation paper, proposing that the expiry day could be on Tuesday or Thursday.

At 3:30 pm, shares of BSE settled at Rs 5,438 apiece on the NSE, higher by 16 percent compared to the previous close.

"SEBI, in a letter to exchanges, has advised not to proceed with the plans to change expiry day and maintain status quo for now," said a source. The sources cited further added that NSE may soon issue a circular announcing that it was maintaining the status quo.

The SEBI consultation paper has also proposed that exchanges will now have to seek prior approval of the regulator for launching or modifying any contract expiry or settlement day.

As a result, shares of BSE might extend gains in trade. When the National Stock Exchange had announced its move, shares of BSE crumbled nine percent in trade on the day, as concerns that volumes and liquidity on BSE could dry up weighed, given that the Sensex expiry day was one day later, on Tuesday.

Brokerage firm Nuvama had said that NSE's latest move to change expiry day to Monday from Thursday would lower the industry volumes as trading avenues for retail traders get constricted.

BSE, on its part, said its performance is dependent upon the volume and value of trades executed on its trading platform, the number of new/ further listings and the amount of capital raised through such issues, the number of active traders in the market, etc.

Therefore, SEBI's push to spread out F&O expiry days may ease concerns for BSE as the NSE could likely revert to Thursday expiries, while BSE sticks to Tuesday. According to international brokerage Jefferies, this could reduce concerns about BSE's market share loss and estimated 12 percent EPS impact.

The brokerage added that the clarity on open interest limits awaited, but overall, there should be a lower impact for BSE. After the correction, the BSE stock has retraced most of its fall, and lower regulatory risks and better markets could aid re-rating.

Jefferies maintained its 'hold' call on BSE shares, with a target price of Rs 5,250 per share, which implies a 12 percent upside from current levels.