Oh the decline could be because there is a 30% decline in derivatives volumes in recent days. This is being attributed to SEBI investigation into the Hedge Funds like Jane Street. A decline of 20-22% is seen in NSE volumes too.
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What’s the source for quoting the 30% decline in volumes?
I checked BSE website and couldn’t find any supporting data for this claim. If possible, could you please present some numbers that show a decline in the BSE derivatives’ volumes.
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It is there on the website. Check Tuesday turnover(3 and 10 June). 50% fall. Tomorrow, more clarity will emerge.
It may have passed or it may persist. We will know in a few weeks.
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negative for BSE limited
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"The shift of NSE’s expiry day from Thursday to Tuesday is expected to help the exchange claw back market share from rival BSE, which had seen a surge in its index derivatives volumes since its previous shift to Tuesday expiry earlier this year. BSE’s share in index options rose to 12.6 per cent from 3.1 per cent a year ago, with premium turnover climbing to around 22 per cent now from 16 per cent in December 2024.
However, Goldman Sachs expects BSE’s market share in premium turnover to drop by 3-4 percentage points with its return to Thursday expiries—down to 18.8 percent from the current 22.2 percent."
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This NSE benefit logic is very flawed. The calculation is that current traders get just 2 days to trade i.e. wed and Thursday for NSE expiry , and the revised Tuesday they will get Friday and Monday and Tuesday so BSE will lose and NSE will gain .
I find this extremely odd. Do traders jump on the band wagon mid week for a weekly expiry . The closer to expiry they are the more is the decay . For option sellers the lower is the premium . Even risk adjusted there is nothing to say that expiry day playing for one more day means there is more volume. I think this is the Hangover of daily expiry and rotation of capital .
Bulk of the market it’s hedging and the rest is speculation. So the hedging folks would like to hedge weekend news . And will likely still do for the 2 days weekend only. The speculation guys will take a call either ways as the Theta / decay gets priced in daily .
Anyway I still think a Monday to Thursday period is more logical, ideally Friday is great but I think BSE must have calculated for decades the traders have been used to Thursday, and will have exisiting strategies that they can execute on BSE now . I think after the noise goes BSE will show that numbers have not changed . More importantly the FPI FII need to move to BSE , and single Contract for CASH needs better implementation
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Reposting with corrections, earlier post got docked for putting AI content as is 
will take of that part going forward.
BSE got docked 
by SEBI in a order yday. SEBI says BSE gave “Selective Access to Corporate Announcements”, and “Lack of Simultaneous Disclosure Mechanism”. They also shared the System Architecture by BSE. There definitely seems to be a gap in different categories of users getting data, just by looking at system Architecture. Maybe its fault of the system designers, but then truth is not all users/stakeholders are getting information at same time.
- LCM Users get first access from DB2
- DB2A/B gets data next. There is a Leased Line DB that PULLs data and PUSHes to paid subscribers. Other subscribers get the data only when they PULL using a webservice.
Overall (being a ex-technology/enterprise architect who has designed such systems before), the system architecture does not meet the business need i.e. All users/stakeholders should get the information at the same time. A Event bus - PUB/SUB or simple RSS framework would be more transparent.
Penalty: Rs.25 Lakh (15lakh for above mentioned reason). Seems SEBI might have acknowledged this was oversight on the technology side.
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Q1 Update:
Derivatives: The average daily turnover was approximately 15,500 Crore during the quarter which roughly translates to 30% growth as compared to the previous quarter. Interestingly the futures turnover has now reached an average daily turnover in excess of 450 crore in the month of June 2025 which is a good news and and an interesting number to track going forward. I expect the revenue from this segment to be in the range of 550 Cr to 630 Cr (the wide range is on account of my inability to identify the impact on account of price revisions undertaken during Q4).
Star Mutual Fund: The numbers seems to be stabilized in line with Q4 and the revenue is expected to remain more or less the same as compared to last quarter.
BSE Star MF - Market Summary
Equity segment: After a few quarters of disappointments, equity segment seems to be picking up again.
The revenue from the segment should be showing a reasonable growth largely in line with the growth in volume.
IPO Market: IPO market picked up from May and the pipeline is looking good - about 25 companies came up with IPO during the quarter as compared to 27 during the earlier quarter. The revenue from the segment should be similar to what was reported during the last quarter.
Colocation racks: About 250-300 racks expected to be in full use by end Q1 2025. Another 50-100 racks expected to be deployed during Q1 and another 100-150 by end of this year taking the total to 500. The revenue from this segment is expected to be on an uptrend but not sure what exactly the numbers are considering the management is currently not disclosing this to investors.
Overall, the revenue numbers are expected to show healthy growth and I wont be surprised if the standalone revenue hit the 1K Cr magic number for the first time in BSE’s history.
Disclosure: Remain invested - no recent transactions.
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So finally one of the asks of BSE CEO for CCN has been implemented. Another one on unbundling of clearing house charges is being discussed, could also be implemented in this FY. With NSDL IPO coming soon & NSE IPO later in year, these are few more triggers that can change the trading complexion in coming quarters. Need to be seen, how BSE mgmt is gearing up for some of these tailwinds, along with the expiry change.
My LInkedIn writeup Common Contract Note: A Game-Changer for Indian Securities Markets
More details on CCN below, as per the Press Release by SEBI. Common Contract Note with Single Volume Weighted Average Price (VWAP) – Enhancing Ease of Doing Business for Market Participants
In a significant step towards promoting ease of doing business for institutional investors and market participants, Common Contract Note (CCN) with a Single Volume Weighted Average Price (VWAP) has been made mandatory with effect from June 27, 2025.
The erstwhile system required separate trade confirmations for each exchange resulting in complicated reconciliation, settlement, and regulatory compliance. Based on the representation received from market participants, it was decided to provide uniformity in post - trade communication. Accordingly, in collaboration with concerned stakeholders, a single consolidated contract note mechanism with uniform VWAP was conceptualized and developed for multi-venue trading.
The reform will simplify the post - trade reporting process by consolidating trades executed across multiple exchanges into a single, harmonized document, eliminating the need to process multiple contract notes. The move aims at increasing cost efficiency, reducing compliance burden for market participants and ensuring consistent trade reporting aligned with the CC interoperability framework.
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Jane Street has had a heavy impact on the BSE share price, primarily due to the fear of reduction in trading volumes. If anyone has done any calculations/analysis on how big the impact is and how much more of a fall can we anticipate it would be helpful. Long term I’m still bullish on BSE and plan to accumulate more once it settles.
Disc: Invested at lower levels.
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Can anyone quantify what would be the incremental positive impact on BSE from CCN introduction ?
Would be amazing to hear the impact of Jane Street fallout and potential loss of trading volumes on BSE option volumes
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Upon some further analysis, I have come to the realisation that this fall in BSE not entirely because of the Jane Street fiasco. It’s more due to the the new expiry cylce strating in from end of August(i think) as well as valuations.
- It must be noted that BSE anyway’s does not get much of the FII flows (hardly 200-250Cr maybe), it’s primarily in NSE.
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Reason for this decline was concerns over a potential regulatory shift by SEBI. Reports indicated that SEBI is considering a proposal to link options leverage with cash market exposure, aimed at boosting liquidity in the cash market while potentially reducing liquidity in the options segment. Move could curb options trading, which accounts for a significant portion of derivative volumes and contributes nearly 58% of BSE’s expected revenue for FY26.
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While researching the competitive landscape of BSE, I took a closer look at NSE.
Here’s what i’ve learned about NSE:
- NSE has over:
- 90% share in equity cash trading.
- 80% share in equity derivatives trading.
- Operating margins >60%
- virtually no debt
- High operating leverage and digital infrastructure enable strong profitability.
Market & Macro Tailwinds
- India’s capital markets are booming:
- Retail brokerage accounts grew from 25M (2015) to 175M+ (2025).
- GDP has surpassed the UK’s, now the 5th largest globally.
- Growth drivers:
- Increasing penetration: active population only 2.9% of the total population.
- Developed economies are above 10% in equity markets
- NSE is central to primary and secondary capital market formation:
- 268 IPOs in 2024 raised $19.5B (vs. NASDAQ’s $22.5B).
- India is projected to be the fastest growing economy and fastest gap per capita growth
- Healthy market cap to gdp ratio with India at 123% vs USA at 175%
Competitive Landscape
- BSE is the only competitor, far smaller and less efficient.
- BSE trades at ~75x earnings, despite weaker fundamentals.
- From 2014, NSE has continuously taken over market share from use
- Winners takes it all in the few years possibility
Business Model
- NSE is an infrastructure-layer business with:
- Minimal working capital needs.
- Low maintenance capex.
- Strong pricing power and essential utility status.
Governance Risks
- Faced two major scandals:
- 2015 co-location controversy
- 2022 CEO scandal (sharing sensitive info with an advisor).
- SEBI-led reforms post-scandals:
- Leadership overhaul.
- Strengthened internal controls and governance.
- Multiple CTOs appointed.
- Considered a stronger company post-reform.
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While analysing Trading Volumes, please also consider looking at the contracts traded, instread of just looking at Premium Turnover. Because lately India Vix has been at a multi year low, and option premiums are low because of that. Because of low IV, even though there might be volume growth in terms of number of contracts traded, but premium turnover might appear stagnant or might even decrease.
Although Exchanges earn revenue basis the Premium Turnover number, but then VIX is something out of their control and hence depicts the cyclic nature of the business. But if exchange is able to grow volumes in terms of contracts traded, even during the Low Vix regime, that would be a positive sign.
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True but SEBI is no Mood let BSE breathe with axing Weekly Expiries as well now although in long term it will be good but the valutions it was getting was because of this only
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Listing of NSDL today exclusively on BSE will likely be a landmark day considering today alone NSDL traded value will be in thousands of crores. I’m sure many of the ones trading and investing in NSDL today has never used this platform before - hope the platform is built to sustain the volumes. If BSE can create a seamless experience, this would likely lead to volume shift in the medium term. Let’s wait and see.
AJ
Disclaimer: Remain invested in BSE - consider my opinions as biased.
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