In a setback for stock exchange BSE, the Securities and Exchange Board of India (Sebi) has denied any relief on the payment of differential regulatory fees based on annual turnover.
Following a letter from the market regulator last week responding to the bourse’s request for a review, the board of BSE has advised the exchange 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,” BSE stated in an exchange filing.
In April, Sebi directed the exchange to pay a regulatory fee on the 'notional value' of annual turnover instead of ‘premium turnover’. As this change would result in a higher outgo as a regulatory fee, the exchange requested 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 fees to the Board,” Sebi stated in its 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 fees along with interest,” it added.
For the dues of FY24, Sebi directed the exchange to pay the sum without any interest within thirty days, while the dues 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 of the strike prices of each contract traded in derivatives, while the premium turnover is the total of the premiums paid on all contracts traded. The notional value is always higher than the premium turnover, resulting in a higher outgo as a fee if the notional turnover is used as the base.
Following a letter from the market regulator last week responding to the bourse’s request for a review, the board of BSE has advised the exchange 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,” BSE stated in an exchange filing.
In April, Sebi directed the exchange to pay a regulatory fee on the 'notional value' of annual turnover instead of ‘premium turnover’. As this change would result in a higher outgo as a regulatory fee, the exchange requested 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 fees to the Board,” Sebi stated in its 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 fees along with interest,” it added.
For the dues of FY24, Sebi directed the exchange to pay the sum without any interest within thirty days, while the dues 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 of the strike prices of each contract traded in derivatives, while the premium turnover is the total of the premiums paid on all contracts traded. The notional value is always higher than the premium turnover, resulting in a higher outgo as a fee if the notional turnover is used as the base.