New Delhi: Leading stock exchange BSE is expected to pay more regulatory fees after market watchdog Sebi asked the exchange to pay fees based on the "notional value" of its options contracts instead of the premium price.
Reacting to the development, BSE shares fell 18.64 per cent to an intra-day low of Rs 2,612.0 on NSE on Monday.
Market experts expect BSE's regulatory fee payments to SEB to increase due to the significant difference between notional and premium prices. This discrepancy arises from the calculation method, which involves multiplying the contract size by the underlying price.
Notional turnover represents the overall strike price of all contracts traded in derivatives, while premium turnover is the sum of premiums paid on all contracts traded.Since estimated value is higher than premium turnover, selecting estimated turnover as the basis requires a higher fee outlay.
"BSE is advised to pay regulatory fees to SEBI on the basis of annual turnover considering the notional value in case of options contracts," the exchange said in a filing to the National Stock Exchange (NSE) on Friday.
Additionally, the exchange has been asked to pay differential regulatory charges for the previous period along with interest at 15 per cent per annum on the remaining unpaid amount. The filing said the amount has been directed to be paid within a month of receiving the letter.
SEBI's letter mentioned that since the introduction of derivative contracts, BS has been paying regulatory fees to the regulator on "annual turnover" considering the premium price for option contracts instead of notional value.In a disclosure on Sunday, BSE said it is currently evaluating the validity of the claim as per the SEBI communication.
If it is confirmed that the said amount is payable, the total differential SEBI regulatory fee and GST for the period FY 2006-07 to FY 2022-2 will be Rs 68.64 crore, including interest of Rs 30.34 crore. BSE said the differential SEBI regulatory fee for FY 2023-24, if liable, could be around Rs 96.30 crore plus GST.
The market watchdog had introduced regulatory fees on recognized stock exchanges under the SEBI (Regulatory Fees on Stock Exchanges) Regulations 2006, under which exchanges are required to pay fees to the board within 30 days of the close of the financial year. The rate of regulatory fee was based on the annual turnover of the stock exchanges.
Reacting to the development, BSE shares fell 18.64 per cent to an intra-day low of Rs 2,612.0 on NSE on Monday.
Market experts expect BSE's regulatory fee payments to SEB to increase due to the significant difference between notional and premium prices. This discrepancy arises from the calculation method, which involves multiplying the contract size by the underlying price.
Notional turnover represents the overall strike price of all contracts traded in derivatives, while premium turnover is the sum of premiums paid on all contracts traded.Since estimated value is higher than premium turnover, selecting estimated turnover as the basis requires a higher fee outlay.
"BSE is advised to pay regulatory fees to SEBI on the basis of annual turnover considering the notional value in case of options contracts," the exchange said in a filing to the National Stock Exchange (NSE) on Friday.
Additionally, the exchange has been asked to pay differential regulatory charges for the previous period along with interest at 15 per cent per annum on the remaining unpaid amount. The filing said the amount has been directed to be paid within a month of receiving the letter.
SEBI's letter mentioned that since the introduction of derivative contracts, BS has been paying regulatory fees to the regulator on "annual turnover" considering the premium price for option contracts instead of notional value.In a disclosure on Sunday, BSE said it is currently evaluating the validity of the claim as per the SEBI communication.
If it is confirmed that the said amount is payable, the total differential SEBI regulatory fee and GST for the period FY 2006-07 to FY 2022-2 will be Rs 68.64 crore, including interest of Rs 30.34 crore. BSE said the differential SEBI regulatory fee for FY 2023-24, if liable, could be around Rs 96.30 crore plus GST.
The market watchdog had introduced regulatory fees on recognized stock exchanges under the SEBI (Regulatory Fees on Stock Exchanges) Regulations 2006, under which exchanges are required to pay fees to the board within 30 days of the close of the financial year. The rate of regulatory fee was based on the annual turnover of the stock exchanges.
