Among the six measures to be taken by Sebi from November 20, restricting weekly maturity to one per exchange is considered to have the biggest impact on volumes.
“We believe NSE’s option premium turnover could be affected by up to 40%, while that of BSE by 20%,” IIFL Securities said.
Currently, NSE has four index derivative products: Nifty, Nifty Bank, Midcap Nifty and Nifty Financial Services. Once the new rules come into effect, NSE will have to choose only one of them for its weekly expiration. However, monthly contracts can continue with the status quo.
“Of the Rs 68 billion ($8 billion) average daily traded premiums in index options, the new rules may eliminate the supply of weekly contracts amounting to ~35% of premiums,” Jefferies said.
For BSE, Jefferies has recently cut earnings per share by 10% assuming discontinuation of the Bankex product and the focus will remain on the volume impact on the ongoing product (Sensex) after implementation of new regulations. According to reports, BSE is likely to opt for weekly expiry of Sensex and remove Bankex from weekly expiry. “For both exchanges, the stock options segment contributes 50-55% of the total revenue. Hence the likely impact on FY26ii earnings (which would capture the impact of new regulations for the full year ) for NSE is probably around 30%, while for BSE it is around 10-12%,” IIFL said. Assuming parity rate with NSE and doubling of market share to 25% in Stock Option Premium, the brokerage estimates 25-30% improvement in FY26 earnings per share for BSE.
“Given such potential and further earnings growth, BSE would continue to trade at premium valuations. We maintain our positive stance on both stocks and any correction in share price would be an opportunity to add,” he said.
BSE shares were trading around 2% higher while NSE was gearing up for IPO
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.