BSE and Angel One shares experienced a significant decline, dropping up to 5%, following reports of potential changes to derivatives trading regulations by the Securities and Exchange Board of India (SEBI). This comes as BSE issues warnings to investors about unsolicited investment recommendations for certain penny stocks.

SEBI's Proposed Consultation Paper

According to sources, SEBI is planning to release a consultation paper within the next month that could bring substantial changes to the Futures and Options (F&O) market. The key points under consideration include:

1. Transitioning from weekly to monthly expiries with a defined glide path
2. Implementing same-day expiries across exchanges
3. Introducing curbs on retail participation in F&O segments with suggested thresholds

Market Reaction

The news of these potential regulatory changes has had an immediate impact on the stock prices of both BSE and Angel One:

Recent Performance

Both stocks have shown a downward trend over the past month:

This recent drop follows a similar pattern observed on August 21, when both stocks fell up to 9% after SEBI Chairman Tuhin Kanta Pandey first discussed the possibility of longer tenor for derivatives contracts.

BSE Warns Investors

In a separate development, BSE issued warnings to investors about unsolicited investment recommendations for Elegant Floriculture & Agrotech India and Spright Agro stocks. These recommendations are coming from unauthorized entities through various platforms including WhatsApp, Telegram, SMS, calls, and social media.

The exchange specifically named several unregistered entities, including Vijay Wealth Advisor, Baadshah Badshah Broking, and Pankaj Bhardwaj Way2laabh, that are operating through Telegram channels and offering trading tips or guaranteed returns.

Elegant Floriculture & Agrotech India, with a market cap of Rs 16 crore, fell 4.95% to Rs 8.07 and hit its 5% lower circuit limit with volumes surging over 1.10 times.

BSE advised investors not to share trading credentials and cautioned against claims of high or assured returns, noting these schemes are neither approved nor endorsed by exchanges.

Next Steps

SEBI is expected to begin consultations with exchanges next week, with the regulator's board meeting scheduled for Friday. Market participants and investors will be closely watching these developments, as any changes to F&O regulations could have significant implications for trading strategies and market dynamics.

The proposed changes, if implemented, could reshape the derivatives market in India, potentially affecting trading volumes, market liquidity, and risk management practices for both institutional and retail investors.

BSE Ltd (Bombay Stock Exchange) has seen a significant boost in its market performance following a strategic move to swap its weekly derivatives expiry day with the National Stock Exchange (NSE) in September. The change, which saw BSE move its expiry from Tuesday to Thursday while NSE's Nifty contracts now expire on Tuesday, has yielded positive results for BSE, outperforming analyst expectations.

Market Share and Turnover Increase

The impact of this change has been notable:

• BSE's market share increased by 110 basis points, reaching 28.2%.
• The exchange's premium average daily turnover (ADTO) rose by 19% to Rs 208.00 billion in the first week of September, compared to August figures.
• Across all exchanges, the premium ADTO climbed to Rs 737.00 billion in early September, marking a 14% month-on-month increase from Rs 645.00 billion in August.

These figures underscore the positive reception of BSE's strategic decision in the derivatives market.

Stock Performance

Reflecting the market's approval of these developments, BSE shares traded 1.5% higher at Rs 2,354.00.

Regulatory Scrutiny

While the exchange celebrates its gains, the broader derivatives market faces increasing regulatory attention:

• The Securities and Exchange Board of India (SEBI) has expressed concerns over the rising retail participation in derivatives trading.
• SEBI has implemented measures to restrict speculative trading in index derivatives.
• This regulatory uncertainty poses challenges for exchanges in terms of earnings visibility.

Industry Implications

The success of BSE's expiry day swap and the subsequent increase in market share and turnover highlight the importance of strategic decisions in the competitive landscape of stock exchanges. However, the growing regulatory scrutiny of derivatives trading introduces an element of uncertainty for all market participants.

As the situation evolves, market observers will be keenly watching how exchanges like BSE navigate the balance between growth and regulatory compliance in the derivatives segment.