BSE shares plunge 19% today on SEBI’s Regulatory Fee Order; Should You Buy?

BSE shares take a severe hit, dropping 19% due to a SEBI directive on regulatory fee calculations. Find out the details and its market implications.

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Shares of BSE Ltd witnessed a sharp decline on Monday, plunging 19% following a directive from the Securities and Exchange Board of India (SEBI), which impacts how the firm calculates its regulatory fees. SEBI has revised its approach regarding the calculation of regulatory fees for BSE, specifically concerning option contracts. Traditionally, BSE paid regulatory fees based on the ‘premium’ value of option contracts. However, SEBI has now mandated that the 'notional value'—the total value of a contract's assets—be considered for calculating these fees.

This change means that BSE faces a significant increase in the fees it owes to the regulator. SEBI has not only instructed BSE to adjust its fee payments moving forward but also to pay the differential for past periods. This includes a substantial interest rate of 15% per annum for any delayed payments.

Financial Impact on BSE and Market Reaction

The financial repercussions for BSE are considerable. The stock exchange must now pay an additional regulatory fee of approximately Rs 165 crore, with Rs 69 crore attributed to past periods from the financial year 2007 to 2023, and an additional Rs 96 crore projected for 2024.

The market reacted swiftly to this news, with BSE's stock value tumbling 18.6% to a low of Rs 2,612.10 on the National Stock Exchange (NSE). This marks the biggest single-day drop for the stock since it was first listed in 2017.

Its peer, Multi Commodity Exchange (MCX), has also been directed to settle a differential fee, albeit a smaller amount of Rs 4.43 crore.

BSE’s Response to SEBI’s Fee Reassessment

BSE has expressed its intent to carefully evaluate the validity of SEBI’s claims. According to a communication filed with the NSE, BSE is scrutinizing the validity of SEBI's demand for additional regulatory fees. The exchange noted, should it be determined that the said fees are due, the additional regulatory fees for previous periods spanning FY 2006-07 to FY 2022-23 would amount to approximately Rs 68.64 crore, inclusive of an interest component of Rs 30.34 crore plus GST.

BSE also confirmed that it has already met its regulatory fee obligations for FY 2024 as of the April 30 deadline, with Rs 1.66 crore plus GST paid based on premium turnover. However, it faces potential additional liabilities of about Rs 96.30 crore plus GST for the same fiscal year if found liable. 

Not sure whether to buy, hold or sell BSE at current levels? Ask LiMo, world’s first-ever AI copilot for stock investing that provides both a judgement and the reasoning behind it. 

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