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Shares of BSE, the only listed stock exchange, rose 3 percent, while Angel One, a leading discount broker, jumped 4.5 percent, even as the regulator market, the Securities and Exchange Board of India (Sebi), announced a tightening of derivatives trading. rules, which should reduce volumes.
Shares of other listed brokerages fell as investors digested the impact of stricter trading rules. Shares of ICICI Securities fell 2.3 per cent, 5paisa Capital 2.9 per cent, Aditya Birla Money 3.5 per cent and Geojit Financial Services 1.7 per cent.
The gains for ESB and Angel One came as analyst reports suggested a smaller-than-expected impact on their profits and highlighted ways to mitigate the effect of the new norms.
Sebi has introduced higher entry barriers and increased margin requirements, along with a slew of other measures, to check the growing retail frenzy in the futures and options (F&O) market.
Analysts and market experts expect a clearer picture after November 20, when most of the changes will take effect. However, they expect the BSE to be less affected than the market leader, the National Stock Exchange (NSE).
BSE shares closed 3 per cent higher at Rs 3,980 apiece after an 8 per cent rise in intraday trade. The ESB only has two weekly expiry products, compared to four for the ESN.
“We believe that NSE’s option premium turnover could be impacted by up to 40 per cent, while that of BSE could be impacted by 20 per cent. However, given the recent tariff increase, the impact on earnings would be less – we estimate an impact of 20 per cent for NSE and 5 per cent for BSE on FY26ii EPS (impact for full year),” IIFL Securities noted in its report.
The report added that the likely revenue impact for the NSE would be around 30 per cent, but for the BSE it would be around 10-12 per cent.
Shares of Angel One also rose over 7 per cent during the day, but cooled to a gain of 4.5 per cent at Rs 2,716 per share.
Brokerage Motilal Oswal Financial Services (MOFSL) has maintained a ‘Buy’ rating on Angel One.
“Our sensitivity analysis produces no impact on Angel One’s FY26 earnings if order volumes decline by 10 percent compared to our 16 percent growth assumption and the company is in able to increase its realization from Rs 19.7 to Rs 25,” the MOFSL report said. .
However, shares of other brokerage firms like 5Paisa, IIFL Securities, ICICI Securities, MOFSL and Aditya Birla Capital fell by 2-4 per cent.
Following Sebi’s announcement, Jefferies highlighted that the changes may result in changes in trading behavior for individual and institutional participants, but the impact will be felt more on retail-focused discount brokers.
“Traditional brokers should see relatively less impact, as the lower margin increases help their HNI clientele (which tends to have a greater diversity of options sellers). Clearing members like Nuvama Asset Services, which cater to institutional players (HFT/FPI), will have a marginal impact, if not non-existent. Other market participants such as AMCs, wealth managers and custodians are not affected,” Jefferies said.
First publication: October 3, 2024 | 5:46 p.m. STI