SEBI's action on BSE to have a Rs 120-crore impact due to payment for past derivative payments: Investec

According to Investec, the regulator action would impact “FY25/26e PBT by around 17-18%”,based on conservative estimates of BSE’s market share.

Market regulator SEBI’s action on BSE to pay regulatory fees on notional turnover instead of premium would have an impact of Rs 120 crore cash outflow for past dues on the exchange, said Investec.

Investec put their ‘buy’ rating and target price under review, due to uncertainty around the earnings impact and due to expensive valuation of the stock after the recent run up.

Investec said BSE would have to cough up Rs 96.3 crore instead of Rs 6 lakh for FY24 based on total derivative volumes in FY24. BSE could make a one- time provision of Rs 96.3 crore for FY24 payment while cumulative impact of past volumes from FY07-24 will be around 120 crore “assuming past derivative volumes are options for BSE”.

According to Investec, the regulator action would impact “FY25/26e PBT by around 17-18%”,based on conservative estimates of BSE’s market share. The report added that actual impact would be higher due to higher market share gain of BSE as per March 2024 disclosures.

The report said BSE could hike the transaction charge by 35 percent and bring it close to NSE’s charges to keep its profitability intact.

As BSE’s current premium to notional value is 0.066 percent, Investec thinks Rs 12 per million of notional turnover cost would become Rs 180 per million of premium turnover. This will reduce the profit per Rs million of premium traded from Rs 280 to Rs 100, which would result in a 64 percent decline in profit pool, the report said.