Shares of BSE plunged 18 percent in morning trade on April 29 after the Securities and Exchanges Board of India asked the exchange to pay the regulatory fee based on the notional value of its options contracts and not based on the value of the premium value.
The development is set to hit the financials of BSE as it results in a big jump in BSE's regulatory fee which has caused investors to dump the stock. There will be a spike in BSE's regulatory fee payment to the SEBI as the notional value is much higher than the premium value because it is calculated by multiplying the contract size with the underlying price.
At 09.58 am, shares of BSE were trading at Rs 2,682.70 on the NSE. This also marks the biggest single-day drop for the stock since its listing.
Trading volumes in the counter also skyrocketed as 34 lakh shares changed hands so far, significantly higher than the one-month daily traded average of 14 lakh shares.
"The correction is triggered by SEBI's directive. Once BSE makes the change, it should be business as usual thereafter. Revised revenue and profitability should be discounted by the market for future price projections," said Sourabh Rungta, MD & CEO at Avendus Wealth Management.
Denting the sentiment for the stock further is the fact that BSE has to pay the fees within a month, including for the past periods with applicable interest of 15 percent per annum on the amount unpaid.
SEBI's letter stated that since the introduction of derivative contracts, BSE has been paying the regulatory fee on "annual turnover" to the board considering premium value for option contracts, instead of the notional value.
Stock exchanges like the BSE and NSE have to pay a regulatory fee to SEBI within 30 days of the conclusion of the relevant financial year.
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