Sebi requests that BSE compute yearly turnover using notional value, since there might be a significant increase in regulatory fees

Sebi requests that BSE compute yearly turnover using notional value, since there might be a significant increase in regulatory fees

The exchange has been required to pay appropriate interest as well as the differential regulatory charge (including the differential regulatory fee of USE, if any) for the previous periods.

The exchange is required to pay its outstanding fees by the market regulator.

According to a letter it got from the market regulator on April 26, BSE would have to pay a large amount for its regulatory charge.

In accordance with the letter, BSE is required to pay the Securities and Exchange Board of India (Sebi) its regulatory fee, which is determined by the "notional value" of options contracts divided by the company's annual sales. According to the regulator's letter, BSE has been using the premium value of options contracts to determine the yearly turnover.

Since notional value is determined by multiplying the contract size by the price of the underlying, it is much larger than the premium value.

On April 26, BSE disclosed the market regulator's letter on the payment of differential regulatory fees for previous periods, together with appropriate interest, via a filing with the National Stock Exchange (NSE).

According to Sebi's letter, BSE (along with the former United Stock Exchange (USE), which merged with BSE in the fiscal year 2014–2015), has been paying the regulatory fee on "Annual Turnover" to the Board based on premium value for option contracts rather than the notional value since the introduction of derivative contracts.

The letter also said that the exchange only paid a quarter's worth of fees to the regulator for FY 2006–07 instead of the whole financial year.

In accordance with Regulation 11(8) of the SECC Regulations, BSE has been requested to pay the differential regulatory fee (including the differential regulatory fee of USE, if any) for the previous periods, along with applicable interest (i.e., 15 percent per year on the amount that is still outstanding, paid late, or paid in part for each month of delay or portion thereof to the Board), within a month of receiving Sebi's letter.

After the relevant financial year ends, stock exchanges have 30 days to pay Sebi a regulatory fee.

According to Sebi's letter, "A stock exchange's annual turnover determined the regulatory fee rate." "Annual turnover" refers to the total amount of transactions that occurred on the stock exchange throughout the specified fiscal year."

In order to pay the regulatory fee to the Board, it was also stated that "the annual turnover" for option contracts must be calculated and has always been considered to have been calculated based on the notional value of the option contracts