Why BSE Share Price is Falling

Monday's market offered up a surprising mix. The benchmark indexes Sensex and Nifty rebounded strongly, climbing 500 and 110 points respectively, after Friday's sharp drop.

The bullish mood on Dalal Street can be attributed to gains in banking and financial services stocks.

But one stock stood out for all the wrong reasons: the BSE itself.

BSE, the fastest stock exchange in the world with a speed of 6 microseconds saw a stunning reversal, plummeting a massive 19%.

This marked its worst single-day performance ever.

So, is the stock of BSE a falling knife or is this just a temporary setback for the fintech company?

Let's find out.

Regulatory Fee Action

Shares of BSE tanked 19% today (29 April 2024) in intra-day trade amid heavy volumes. This after the market regulator on Friday directed the exchange to pay a regulatory fee on the notional value of annual turnover.

BSE is liable to pay total regulatory fees along with 15% interest, to the market regulator based on annual turnover considering the notional value in case of option contracts.

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.

In case, if it's ascertained that the said amount is payable, then the total differential fee from FY07 to FY23, would be about Rs 686.4 m plus GST, which includes interest of Rs 303.4 m.

MCX, BSE's peer company, has also been asked to pay a differential fee of Rs 44.3 m.

Meanwhile, the BSE said it was currently evaluating the validity, or otherwise, of the claim as per market regulator communication.

What Next?

Ongoing discussions about a potential merger within GIFT City are underway, although there's no definitive timeline in place.

The BSE, the country's oldest bourse, is shifting its focus towards stock derivatives after establishing itself in index derivatives.

However, before delving into stock options and futures, the exchange aims to stabilise its offerings in Sensex and Bankex derivatives.

There's no official timeline for the introduction of stock derivatives, with the immediate priority being to increase institutional participation in index derivatives.

While the rival NSE offers over 180 stocks in index derivatives, the BSE may initially provide a smaller selection. Whether the BSE will offer incentives to members for trading in stock derivatives, as it has done in the index derivatives segment, remains uncertain.

In addition, the BSE is investing in infrastructure and technology to enhance trade execution speed and handle larger trade volumes effectively.

How Shares of BSE have Performed Recently

Over five days, BSE shares are trading lower by 3%, while it has gained 27% in 2024 so far.

Over the past year, the stock has given a multibagger return of over 400%.

The company touched its 52-week high of Rs 3,264.7 on 24 April 2024 and its 52-week low of Rs 452 on 24 April 2023.

About BSE

The Bombay Stock Exchange (BSE) is an Indian stock exchange which is located on Dalal Street in Mumbai. Established in 1875 by cotton merchant Premchand Roychand, a Jain businessman it is the oldest stock exchange in Asia and the tenth oldest in the world.

BSE provides an efficient and transparent market for trading in equity, currencies, debt instruments, derivatives, and mutual funds. BSE SME is India's largest SME platform which has listed over 250 companies.

BSE Star MF is India's largest online mutual fund platform which processes over 27 lakh transactions per month and adds almost 2 lakh new SIPs every month.

BSE Bond is the transparent and efficient electronic book mechanism process for a private placement of debt securities.

To know more about the company, check out the BSE company fact sheet and quarterly results.

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