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The Securities and Exchange Board of India (SEBI) has proposed changes to Futures & Options (F&O) trading, sending ripples through the Indian stock market. These proposed changes, which aim to regulate and potentially tighten the F&O market, have impacted the share prices of key players like Angel One and the Bombay Stock Exchange (BSE).
Angel One Ltd., a leading brokerage firm, saw its shares fall by 2.1% in early trading on Wednesday following SEBI's announcement. Jefferies, a prominent brokerage firm, highlighted that the new rules could affect nearly 35% of F&O volumes, leading to a tighter market. This tighter market, Jefferies argued, could significantly impact players like Angel One, Paytm, and others like Motilal Oswal, ICICI Securities, and IIFL Securities.
Investec, another brokerage firm, predicts a 30% drop in the number of derivative orders per client for Angel One. As a consequence, they anticipate that Angel One might increase their order fees from ₹20 to ₹25. Despite this, Investec maintained their “buy” recommendation on Angel One with a price target of ₹2,500.
The BSE, on the other hand, saw its shares rise by 4% on Wednesday. However, Jefferies noted that the removal of the Bankex weekly contract could negatively impact the BSE's Earnings Per Share (EPS) by 7% to 9% over the financial years 2025-2027. This highlights the potential trade-offs and complexities that the new F&O regulations could bring.
The proposed changes include rationalizing options strikes, collecting option premiums upfront from buyers, eliminating calendar spread benefits upon expiry, introducing intraday position limit monitoring, increasing contract sizes by nearly 4x, rationalizing weekly index products, and increasing margin requirements for contracts nearing expiry.
These changes are likely to have a significant impact on the F&O market and its participants, from retail traders to major brokerage firms. The full implications of these regulations will unfold in the coming months as market players adjust to the new environment.
Source: Angel One shares fall but BSE jumps 4% after SEBI proposes changes to F&O trading