On the flip side, BSE’s weekly contracts, which expire on Tuesday, will now expire from Thursday, starting September 1 this year. BSE wrote in a notice that it had applied to the regulator to grant it a Thursday expiry, and that the request has been approved.
Shares of BSE have already corrected 12% from their recent all-time high levels of ₹3,030. However, the stock has nearly tripled in value over the last 12 months.
Sriram Krishnan of NSE, while speaking to CNBC-TV18 on Tuesday, had mentioned that the shift of NSE’s expiry to Tuesday is a huge positive for them.
BSE’s expiry had earlier shifted from Friday to Tuesday and that had resulted in an increase in its market share. From 16.4% in December last year, BSE’s market share stood at 23.5% at the end of May.
“In our view, if BSE was to maintain its Tuesday expiry, market share would remain at around current levels. But a move to Thursday, could see it lose nearly 3 percentage points of market share, leading to 13% in index options ADP loss, thereby posing a 8% Earnings Per Share (EPS) downside risk,” brokerage firm Goldman Sachs wrote in a note on Tuesday.
Jefferies cited the management of BSE in a note on Monday, saying that the transition of expiry days may not have a material impact on volumes.
“From the investors’ point of view, honestly, there’s not much change. From a trader’s point of view, for algos, there’ll be a problem, because your back-test data will probably get a jumbled up since you don’t have much data for Tuesday expiries. Apart from that, I think over a period of time, NSE might claw back maybe 10–20% market share,” Rajesh Baheti of Crosseas Capital Services said.
Dipan Mehta of Elixir Equities said that all the positives for BSE has already been priced in and that the current valuations are difficult to justify.
“To an extent, all the optimism has been priced in, in my opinion. No doubt, exchanges have a nice moat around them. They’re difficult businesses to run, even more difficult to enter. But at the end of the day, they are cyclical businesses, and you cannot justify paying such high valuation multiples for such businesses,” he said.
Shares of BSE ended 1.4% lower on Tuesday at ₹2,660. The stock has declined for the last five trading sessions, having hit a record high of ₹3,030 on June 10.
(The expiry day newsbreak by CNBC-TV18’s Yash Jain was confirmed on Tuesday.)
