Among all the six steps to be taken by Sebi with effect from November 20, restricting of weekly expiry to one per exchange is seen as having the highest impact on volumes.
“We believe NSE’s option premium turnover could get impacted up to 40%, while that of BSE by 20%,” IIFL Securities said.
At present, NSE has four index derivative products – Nifty, Nifty Bank, Midcap Nifty, and Nifty Financial Services. Once the new rules come into effect, NSE will have to pick only one of them for weekly expiry. Monthly contracts can, however, continue with the status quo.
“Of the Rs 68,000 crore ($8 billion) of average daily traded premiums in index options, new rules can remove the supply of weekly contracts amounting to ~35% of premiums,” Jefferies said.
For BSE, Jefferies has recently cut EPS by 10% assuming discontinuance of Bankex product and the focus will remain on volume impact on continuing product (Sensex) post implementation of new regulations. According to reports, BSE is likely to go with Sensex weekly expiry and remove Bankex from the weekly expiry.”For both the exchanges, the equity option segment contributes 50-55% of total revenues. Hence the likely impact on the FY26ii earnings (which would capture full year impact of the new regulations) for NSE is likely to be around 30%; while for BSE to be around 10-12%,” IIFL said.Assuming at par tariff with NSE and doubling of market share to 25% in Equity Options premium, the brokerage estimates a 25-30% upgrade in FY26 EPS for BSE.
“Given such potential and higher earnings growth, BSE would continue to trade at premium valuations. We maintain our positive stance on both stocks and any correction in stock price would be an opportunity to add,” it said.
BSE shares were trading around 2% higher, while NSE has been gearing up for IPO