BSE Shares Surge 13% As NSE Defers Monday Expiry Plans After SEBI Papers – News18
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Shares of BSE Ltd climbed over 13% in Friday’s trade after NSE deferred its decision to change weekly and monthly expiries of F&O trades
BSE Shares Surge Over 13%
Shares of BSE Ltd climbed over 13 per cent in Friday’s trade after NSE deferred its decision to change weekly and monthly expiries of futures and options (F&O) trades to Mondays from Thursdays.
Earlier on March 4, the NSE announced that a circular would take effect from April 4, 2025, which would revise the expiry day for all existing contracts to a new expiry day on April 3. However, if SEBI’s consultation papers are implemented later, NSE may revert to a Thursday expiry and BSE will maintain its Tuesday expiry. This potential change is expected to alleviate concerns about BSE losing market share or experiencing a decline in earnings due to the NSE’s proposed shift.
According to MOFSL, the proposed shift from NSE’s current expiry day to Monday could have impacted BSE’s volumes, as BSE’s expiry is currently on Tuesday. However, the implementation of SEBI’s consultation paper will allow for spaced-out expiry days between the exchanges, benefiting BSE. MOFSL recommended a ‘Buy’ on BSE, suggesting that with BSE retaining its Tuesday expiry, NSE would likely maintain its Thursday expiry, which should allow steady growth for BSE.
With the expiry day on Tuesday ahead of NSE’s, BSE is expected to benefit from time decay, which will help maintain its market share. However, the risk remains with the potential implementation of SEBI’s consultation paper on entity-level limits.
After a January circular, both BSE and NSE had selected Tuesday and Thursday as the expiry days for derivatives contracts on single stocks and indices. However, NSE recently proposed moving the final settlement day to Monday. SEBI’s consultation paper noted that monthly single-stock derivative contracts expire mid-month, while monthly index derivatives expire in the last week of the month.
SEBI pointed out that spacing out expiry days through the week would reduce concentration risk and offer exchanges the opportunity to differentiate products. However, too many expiry days could lead to hyperactivity on expiry days, which might undermine investor protection and market stability.
To formalize final settlement days for equity derivatives contracts across exchanges, SEBI proposed that all equity derivatives contracts on an exchange be limited to either Tuesdays or Thursdays. This would ensure optimal spacing between expiry days, while preventing exchanges from choosing either the first or last day of the week. SEBI also suggested that exchanges would continue to be allowed one weekly benchmark index options contract on their chosen day (Tuesday or Thursday).
For other equity derivatives contracts, such as benchmark index futures, non-benchmark index futures/options, and single-stock futures/options, SEBI proposed a minimum tenor of one month, with expiry falling in the last week of the month, on either the last Tuesday or last Thursday. Additionally, stock exchanges would need prior approval from SEBI for launching or modifying any contract expiry or settlement day.
BSE’s Bonus Shares Proposal
Meanwhile, BSE shares are also in focus as the exchange’s board is set to meet on Sunday, March 30, to discuss a proposal regarding bonus shares. If approved, this would mark BSE’s second bonus issue since 2022.
BSE, known for being a consistent dividend payer, had announced a 2:1 bonus issue in March 2022, meaning shareholders who held one BSE share received two additional shares, increasing their total holdings from one share to three.
