BSE: Analysts cautious as derivatives expiry swap puts earnings at risk

BSE shares fell 6% at open after Sebi allowed expiry day swap in equity derivatives between NSE and BSE

Shares of Bombay Stock Exchange (BSE) nosedived 6 per cent on Wednesday, as the market regulator allowed a swap in equity derivatives settlement days with its rival, the National Stock Exchange (NSE).

 

The Securities and Exchange Board of India (Sebi) permitted derivatives contracts on the NSE to expire on Tuesdays, from the current Thursday expiry. As per the street's expectations, BSE moved to shift its expiry to Thursday, from the current Tuesday. 

 

The current expiry days will remain in effect until August 31. Starting in September, both exchanges will transition to their newly designated days.  NSE had initially planned to shift expiries to Mondays but had to abandon the plan after Sebi’s consultation paper, which was later approved in the regulator's March board meeting.

 

"If NSE has expiries on Tuesdays, the premium just ahead of the expiry day will be lower compared to the beginning of the cycle," according to Sriram Krishnan, chief business development officer at NSE. "The exchange may see much more activity than what we see now." 

What sparked the decline in BSE Shares?

As anticipated earlier, multiple brokerages issued earnings cuts for the BSE stock, as they expect a hit in the key revenue-generating segment -- index options premium turnover. 

 

The option premium is the price at which the option contract is bought or sold, and for exchanges, this is the largest revenue-generating segment. This is why a decline in market shares in this segment could trigger an earnings cut for any exchange. 

 

Goldman Sachs warned that BSE may face a 3 percentage point loss of market share and a 2 per cent cut in FY26 EPS estimate. "This is based on our study of imposing the new expiry days on year-to-date premiums traded as a pro-forma analysis."

 

Earlier, when BSE had swapped its expiry to Tuesday, the exchange had been gaining market share in this space against its rival, which now looks threatened. Since October 2023, market share has increased by about 0.7 to 0.8 percentage points each month on average, Goldman Sachs said. This includes the impact of options reforms that began in November 2024 and the earlier expiry day change in January 2025.

 

Currently, BSE gets three working days and NSE gets two working days, and if that reverses, it can potentially impact 10-15 per cent of BSE's volumes, according to analysts at UBS. A 10 per cent drop in volumes can impact profitability by 5-6 per cent, it said.   Track LIVE Stock Market Updates Here

Can BSE limit the impact? 

"Market share and volumes are influenced by multiple factors. At this point, it is not possible to base our analysis solely on one factor," according to Sundararaman Ramamurthy, managing director and chief executive officer of BSE. 

 

BSE’s ability to build liquidity in longer-term contracts could help offset the impact, while the implementation of a common contract note may support market share gains in the cash segment, Jefferies said in its report. 

BSE share price history

Shares of BSE slipped over 6 per cent in Wednesday's intraday session as investors assessed the impact of expiry dates swap. The exchange's stock fell as much as 6.17 per cent during the day to ₹2,500 per share, the biggest intraday fall since April 7 this year.

 

The counter has rallied 137 per cent since its March lows and is up 49 per cent on a year-to-date basis. Meanwhile, the benchmark Nifty50 is up 5.3 per cent so far this year. 

 

The stock pared losses to trade 1.5 per cent lower at ₹2,623 apiece, compared to a 0.28 per cent advance in Nifty 50 as of 10:05 AM. BSE's stock hit a life-high of ₹3,030 apiece on Tuesday (June 10, 2025) while its 52-week low share price is at ₹704.99. BSE has a total market capitalisation of ₹1.07 trillion, according to NSE data.