In a setback to BSE, Sebi denies relief on payment of regulatory fee

Exchange's board has advised payment of Rs 167 cr of dues after regulator's response to letter seeking a review

In a setback to BSE, the market regulator has denied any relief to the stock exchange on the payment of differential regulatory fee based on annual turnover.

Following a letter from the Securities and Exchange Board of India (Sebi) last week in response to the bourse’s request for review, the board of BSE has advised to pay the differential fee.

“This payment would lead to a total outflow of approximately Rs 167.33 crore as against the provision of Rs 169.77 crore made in the financials for the year ended March 31, 2024,” said BSE in an exchange filing.

Sebi in April directed the exchange to pay the regulatory fee on 'notional value' of annual turnover instead of ‘premium turnover’. As the change would lead to higher outgo as a regulatory fee, the exchange requested for a review in a letter to Sebi in June.

“It is reiterated that the annual turnover for option contracts is to be computed and was always deemed to have been computed on the basis of the notional value of the option contracts for the purpose of payment of regulatory fee to the Board,” said Sebi in the response.

“In the absence of any limitation period, a reasonable look back period, i.e., a limitation period of 10 years (the period starting from FY 2014-15) has been considered reasonable for the purpose of recovery of differential regulatory fee along with interest,” it added.

For dues in FY24, Sebi directed the exchange to pay the sum without any interest within 30 days. That for FY22 and FY23 are to be paid with interest. However, for the preceding seven years from FY15 to FY21, the exchange has been allowed to pay the differential fee along with interest in three equal annual instalments between August 2025 and August 2027.  

Notional turnover refers to the total strike price of each contract traded in the derivatives, while the premium turnover is the total of the premium paid on all contracts traded. The notional value is higher than the premium turnover, thus a higher outgo as a fee if the notional turnover is kept as the base.