Brokerages have raised concerns about BSE’s market share following the Securities and Exchange Board of India’s (SEBI) approval on Tuesday of NSE’s proposal to shift its derivatives contract expiry to Tuesdays. Analysts believe that the country’s oldest exchange could see a drop in volumes as well as profitability after the change in the expiry day to Thursday.
However, BSE MD & CEO Sundararaman Ramamurthy maintained that a Thursday expiry is ultimately beneficial for the exchange. “A Thursday expiry aligns well with global market practices, with most foreign institutional investors having algorithms aligned with that day of the week, he said. Ramamurthy added that since most investors initiate their derivatives strategies at the start of the week, a Thursday expiry provides more time to react to market developments and optimise positions. He also noted that the shift is well spaced from NSE’s Tuesday expiry, offering a balanced trading calendar.
In a report, UBS noted that BSE currently benefits from three working days between expiry cycles, compared to two for NSE. If this situation reverses, BSE could potentially see a 10–15% decline in trading volumes. According to UBS, a 10% volume drop could lower BSE’s profitability by 5–6%, reduce market share by 210 basis points, and dent its valuation by 8%. The report highlighted that BSE’s Tuesday (T–2) expiry contributes around 15% of total volumes, while the Monday (T–1) expiry contributes 20–21%. “A change in expiry could mathematically impact up to 15% of volumes due to the loss of one trading day,” UBS said. However, it added that some of this decline could be offset by higher trading activity on non-expiry days.
A Jefferies report said: “Our interactions with market participants indicate a 5-10% impact on volumes in the near-term and build-up thereafter” but it noted that BSE’s ability to build liquidity in longer-term contracts can offset this impact and implementation of a common contract note can aid market share in the cash segment. It has trimmed EPS estimates by 1-2% to factor in tad lower volumes.
Motilal Oswal has downgraded BSE stock from ‘buy’ to ‘neutral’. It said the expiry shift will likely cut premium turnover market share by 350–400 bps to 18–19%, and FY26/27 earnings expectations have been cut by 9%/12% as premium average daily turnover lowered to Rs 13,700 crore/Rs 15,700 crore. According to it, valuations appear stretched at 53x FY27E P/E post a 48% rally since December 24. “While long-term fundamentals stay intact, expiry-related headwinds limit near-term upside,” it said.
When asked about potential market share loss and the exchange’s future plans, Ramamurthy said, “BSE’s continued focus on developing products and services that align with market demand and enhance market depth has enabled us to gain traction within the broader market ecosystem.”
He added, Thursday has remained the expiry day in India over a long period where market witnessed significant growth Going forward, the exchange will focus on product and microstructure development, he said and added, “We will continue to monitor market demand and develop products and services to meet the ever growing demand of the thriving Indian capital markets within the regulatory boundaries.”