A year on, clearing charges still a bone of contention between NSE, BSE

BSE cites higher clearing and settlement charges as one of the factors weighing down its net profit

(This report has been updated)   The National Stock Exchange (NSE) and the BSE are yet to find some common ground on the disagreement over the clearing and settlement charges which has stretched for more than a year. The NSE stated in its latest financial statements that its wholly-owned subsidiary NSE Clearing (NCL) was in deficit of Rs 177 crore in the minimum liquid assets required under the norms laid down by the Securities and Exchange Board of India (Sebi). The NCL added that the deficit was mostly on the account of pending dues from rival BSE that amount to Rs 312 crore.

 

“This deficit will be replenished by the internal accruals/recovery of the receivables before March 31, 2025,” NCL said.

 

Last year, the BSE cited higher clearing and settlement charges as one of the factors weighing down its net profit. The exchange sought relief from the NSE and pitched for a review of the charges under the interoperability agreement. However, the NSE clarified that they had no plan to restructure the agreement and would continue with the pricing defined under the agreement.

 

According to sources, the matter has been discussed in the Secondary Market Advisory Committee of the market regulator.

 

In an analyst call on financial results on Wednesday, NSE’s CFO Ian D'Souza said NCL is looking to receive the pending payment from BSE.  

 

On NSE’s initial public offering, Managing Director and Chief Executive Officer, Ashishkumar Chauhan said they are yet to receive an approval from Sebi. 

Another person familiar with the development said that the BSE would discuss the matter in its board meeting scheduled for Thursday.

 

“The exchange will come out with a statement,” said a source, indicating that there may be some dues from the NCL to the BSE. In its financial results for the second quarter of FY25, the BSE recorded Rs 101 crore as the clearing and settlement expense.

 

Emailed queries sent to the BSE remained unanswered till the time of going to press.

 

Introduced in 2019, the interoperability framework allows trades executed on any of the exchanges to be settled or cleared at either of the two clearing corporations – NCL or ICCL, fully owned by the NSE and the BSE, respectively.

 

Since a majority of the trading happens through brokers who are members of the NCL, the charge outgo on the BSE comes higher. Clearing and settlement fees are linked to the trading turnover. If the turnover increases, the fee (usually levied Rs per crore of turnover) reduces. The interoperability is also crucial for the continuity of the market ecosystem in case one exchange or clearing body faces a technical snag or an unforeseen situation.

 

The BSE can cut down on these charges if more clients opt to settle on ICCL instead of NCL.