SEBI demands BSE to pay proper regulatory fee with interest

Stock exchanges have to pay a regulatory fee to SEBI based on every financial year’s annual turnover.

In this regards, SEBI has issued the following order to BSE

  • Since introduction of derivative contracts, BSE has been calculating turnover wrongly in case of the option contracts. It’s calculating turnover considering premium value of options contracts instead of the notional value.
  • Accordingly, BSE is now ordered to pay differential fee for all the past years along with an interest of 15% p.a.

Impact of the order

  • BSE has informed the follwing
    • from FY 2006-07 to FY 2022-23, additional fee would be approx. Rs 68.64 cr plus GST which includes interest of Rs 30.34 cr.
    • for FY 2023-24, it would be liable to pay additional fee of Rs 96.3 cr plus GST as against Rs 1.66 cr plus GST already paid (based on the premium value calculation)

Previous years’ impact seems nominal given that BSE was small in derivatives and it’s only in recent years that it’s gaining traction.

However, when one looks at FY24, the impact seems substantial against the reported annual PBT of around Rs 600 cr. This is the kind of impact that one can expect going forward.

Why did the lapse happen?

This is what is most confusing.

How did it not come to SEBI’s notice for so many years? NSE must already be paying it based on notional value. Discrepancy between what SEBI would be receiving from both entities would be glaringly clear.

Besides, how come auditors allow it to pass for so long?

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