A booming market rally and skyrocketing turnover have led to hefty regulatory fee for stock exchanges. The two stock exchanges, BSE and National Stock Exchange (NSE), paid Rs 1,066.24 crore in FY24 — more than double from Rs 467.96 crore in the previous fiscal year to the Securities and Exchange Board of India (Sebi).
According to the NSE’s annual report for FY24, regulatory fee doubled in the year to Rs 978.85 crore from Rs 476.61 crore due to an “increase in volumes.” Meanwhile, BSE recorded regulatory fee of Rs 192.95 crore for FY24, about eight times of Rs 21.35 crore in FY23. This includes a provision of Rs 169.77 towards differential regulatory fee for past periods, including penal interest at 15% per annum, as per a Sebi directive in April. In an exchange filing last week, BSE said that its board has approved an outgo of Rs 167.33 crore as a differential fee.
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Regulatory fees are mandatory fees that the stock exchanges have to pay the regulator based on their annual turnover within 30 days of the end of every financial year. Sebi charges 0.0001% of the turnover for both buy and sell transactions in the stock market.
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The total turnover in the equity derivatives segment, which includes the notional value of options, of NSE doubled over the year to Rs 79,927.67 trillion in FY24, while that of BSE rose over 20% on year to Rs 8,028.93 trillion, data on the exchange’s website showed.
In April, Sebi directed the stock exchange to calculate the regulatory fee based on the ‘notional value’ of its annual turnover, rather than the ‘premium turnover’. Anticipating an outgo of around Rs 169.77 crore, the exchange had sought relief from Sebi in June.
However, Sebi responded last week by reiterating that the annual turnover for option contracts is to be computed and was always deemed to have been computed based on the notional value of the option contracts for the purpose of payment of regulatory fees.
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“In the absence of any limitation period, a reasonable look back period, i.e., a limitation period of 10 years (the period starting from FY 2014-15) has been considered reasonable for the purpose of recovery of differential regulatory fee along with interest,” Sebi said in a letter to BSE.
In response to this clarification from Sebi, BSE’s board decided to proceed with paying the differential regulatory fee. “This payment would lead to a total outflow of approximately Rs 167.33 crore as against the provision of Rs 169.77 crore made in the financials for the year ended March 31, 2024,” BSE said in an exchange filing.
