The domestic stock exchanges have seldom had it so good. Over four years of a bull market, coupled with investors entering in droves — it’s a heady mixture for the bourses. Consequently, their coffers have been flowing over.
Sample this: India’s biggest stock exchange – the NSE – reported a 57% and 94% year-on-year growth in profit in the last two quarters of FY25, respectively. Its listed counterpart – the BSE – has doubled its profit (y-o-y) every quarter in the past two years except in the fourth quarter of FY24.
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But as they say, all good things come to an end. While the sharp decline in the markets since September has reduced investor enthusiasm significantly, the Securities and Exchange Board of India’s (SEBI) strict guidelines on the futures and options (F&O) segment has taken its toll as well.
SEBI, prompted by the finance ministry and its internal research, moved to curb retail investors’ enthusiasm in F&O, and both brokerages and stock exchanges are now feeling the heat. The total F&O volumes in the current quarter stand have fallen to Rs 15,205 lakh crore, which is half of that in the second quarter of FY25, when it had hit Rs 32,734 lakh crore. The total F&O volumes were close to Rs 15,108 lakh crore in the first quarter of FY24.
With shrinking footfalls at the trading terminals, exchanges are back to slugging it out for fewer customers – much like the old times. An NSE spokesperson said: “The stock exchanges are frontline regulators of stock markets, the notion of competition is not important in such a role.” But market share does matter, as it impacts profitability as well as valuations.
The turnaround story of BSE: The fortunes of the BSE changed remarkably after Sundararaman Ramamurthy took over as its MD and CEO in April 2023. Elected with 71% votes, Ramamurthy, who had earlier spent over two decades at the NSE, made significant changes.
One of the key factors was its decision to change the expiry for the Sensex F&O contract from Thursdays to Fridays. Following Sensex’s success, the BSE moved the Bankex’s expiry to Mondays from Thursdays. This followed the introduction of single-stock derivatives by the exchange from July 1 and other unique products in the index derivatives.
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