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Informist, Friday, Aug 16, 2024

 

MUMBAI – BSE Ltd said that its board today approved the payment of around 1.67 bln rupees differential regulatory fee on turnover for past periods, including penal interest at 15% per annum, demanded by the Securities and Exchange Board of India. The BSE had made a provision of 1.70 bln rupees for the regulatory fee following the first intimation of demand by SEBI on Apr 26.

 

As per Wednesday's filing by the BSE on the National Stock Exchange, SEBI had written to the BSE on that day rejecting its request for review of the demand made in the Apr 26 letter, but with a minor concession of excluding the period from 2006-07 (Apr-Mar) to 2013-14 from the calculation of the differential fee amount. In its Apr 26, SEBI had directed to BSE to pay the regulatory fee on turnover considering notional value in the case of options from 2006-07 onwards.

 

The BSE had been calculating the turnover based on premium turnover in the case of options for the purpose of paying regulatory fees in the past many years. After receiving SEBI's Apr 26 letter BSE wrote to the market regulator seeking a review.

 

Following the SEBI demand, BSE calculated the value to be around 1.65 bln rupees, as per its filing of Apr 28. In BSE's calculation, the differential amount for the turnover fee was 963 mln rupees for 2023-24 without attraction of penalty interest as the last date of payment for stock exchanges was Apr 30. For the years from 2006-07 to 2022-23, BSE calculated the differential turnover fee to be around 383 mln rupees and an interest of 303.4 mln rupees.

 

The BSE provided for 1.70 bln rupees towards the differential regulatory fee in its accounts for 2023-24.

 

In its letter to BSE on Wednesday, SEBI reiterated that "the annual turnover for option contracts is to be computed and was always deemed to have been computed on the basis of the notional value of the option contracts for the purpose of payment of regulatory fee to the Board." However, the market regulator limited the look back period to 10 years, from 2014-15 to 2023-24, and forego the differential fee for the earlier period.

 

This relaxation in the demand, according to SEBI, was due to the absence of any limitation period. The market regulator said that fixing the limitation period in BSE's case to 10 years "has been considered reasonable." The market regulator, however, did not specify the exact quantum of differential turnover fee it expected BSE to pay.

 

In today's board meeting, BSE estimated the outflow on account of the SEBI demand to be 1.67 bln rupees, slightly higher than its estimate of 1.65 bln rupees in April, but below its provision of 1.70 bln rupees.

 

The concession by SEBI for the eight years from 2006-07 to 2013-14 appears, therefore, not to have made any notable reduction in BSE's estimate. The BSE did, however, record turnover of 167.59 trln rupees in options contracts during that eight-year period, back-of-the-book calculations from data on BSE's website showed.

 

Today, shares of BSE closed 3.37% higher at 2,645.95 rupees on the NSE. End

 

Reported by Rajesh Gajra

Edited by Deepshikha Bhardwaj

 

 

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