BSE to roll out single stock futures from July 1

BSE will launch single stock futures from July 1, the bourse said on Wednesday. This will be a fortnightly product and will be free of cost initially. Rival NSE currently offers over 180 stocks in index derivatives, but BSE may offer a much lower number to begin with, said market watchers.

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BSE relaunched its weekly Sensex options product last year, with a Friday expiry. Bankex expiry was shifted to another day as well. BSE has wrested a double-digit market share in notional turnover in index derivatives, which is expected to climb and stabilise at 18-20 per cent in the coming months, according to analysts.

To deepen market

Shoring up volumes in stock derivatives, may be a lot harder, given the problem of higher volatility and lower depth, said experts.

The exchange said on Wednesday it has readied 100 colocation racks with an aim of deepening the market, and improving participation from algo and high frequency traders, especially in index options.

The bourse said it will discuss the issue of higher regulatory fees on options contracts with the regulator. The exchange was recently asked to cough up more fees on options contracts by the regulator for several years along with interest. It has been paying the regulatory fee on the annual turnover — taking into account the premium value for options contracts. As per norms, the fees need to be paid on the notional value of options contracts. In addition, the fees paid to the regulator for FY07 was for a quarter instead of a full year.

The total differential on the SEBI regulatory fees from FY07 to FY23, would be ₹68.64 crore plus GST which includes interest of ₹30.34 crore.

The exchange intends to pass on most of the additional cost on fees to investors by increasing the transaction charges. Jefferies recently downgraded BSE to “hold” from “buy” and cut its price target to ₹2,900 from ₹3,000 earlier.

The exchange said it will reallocate a portion of its settlement guarantee fund for currency derivatives after the necessary regulatory approval.