Key Drivers Behind BSE’s Rally
- SEBI’s New Rules on Derivatives Expiry
- SEBI limited index derivatives expiries to just two days per week (Tuesdays or Thursdays).
- This was seen as benefiting BSE, as NSE had an advantage with multiple expiries.
- NSE deferred its plan to shift index derivatives expiry to Monday, originally set for April 4.
- BSE’s Growing Market Share
- Over the last two months, BSE’s market share jumped from 13% to 19% (QoQ).
- Options premium volume surged 30% quarter-on-quarter.
- More brokers and high-frequency traders are now preferring BSE.
Market Reactions & Analyst Views
- BSE stock surged 17% on Friday, marking its best single-day gain in six months, closing at ₹5,438.
- Analysts previously downgraded BSE earnings estimates due to NSE’s shift, but SEBI’s rule change reversed sentiment.
Impact of SEBI’s Decision
- Uniform Expiry Days Across Exchanges
- BSE and NSE must choose either Tuesday or Thursday for derivatives expiries.
- This prevents exchanges from changing expiry days multiple times in a year.
- Market Integrity & Risk Management
- SEBI’s move aims to reduce concentration risk and maintain market stability.
- High derivatives trading volumes on expiry days led to concerns over systemic stress.
- Challenges for New Entrants
- Exchanges like NCDEX and MSE were planning to introduce weekly index options.
- SEBI advised them to diversify and not rely solely on derivatives trading.
SEBI Eases Intraday Monitoring Rules for Index Derivatives
- New rules were set to take effect from April 1 but faced industry pushback.
- SEBI issued a circular on Friday stating breaches of limits will not attract penalties for now.
- New intraday monitoring system:
- Exchanges will take at least four random snapshots of positions daily.
- Industry bodies raised concerns over traders’ ability to comply with current position limits.
- SEBI may shift to delta-based or futures-equivalent limits, rendering existing preparations obsolete.
Outlook
- BSE benefits from SEBI’s move, narrowing its gap with NSE in derivatives trading.
- More brokers and traders shifting to BSE could drive further stock gains.
- Intraday monitoring rule relaxation provides temporary relief but could change with new frameworks.
- The competition between BSE and NSE will intensify, shaping India’s derivatives market in the coming months.
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