BSE Ltd Slides Over 7% Amid Market Sell-Off and SEBI’s Derivatives Reform Push

On April 7, 2025, BSE Limited has been affected during a broader sell-off around the markets that day. The exchange operator's shares lost 7.17% till 01:42 pm as market-wide turmoil and burgeoning regulatory action kept sentiment under pressure.

A key reason that has been seen as a trigger for the stock to fall over the past few days could be a recent consultation paper released by the markets regulator, the Securities and Exchange Board of India (SEBI), making important changes in the equity derivatives space. SEBI also recommended standardisation of expiry of all derivatives contracts to Tuesday or Thursday, which in turn is expected to "optimise spacing" and "reduce speculative retail participation".

This came after SEBI in October, limited weekly options trading to one benchmark index on each exchange, in a bid to rein in speculative derivatives volume. Nevertheless, the regulator noted exchanges were still rolling out contracts with differing expiry days, a practice SEBI now wants to limit further.

This would enable each stock exchange to list one weekly benchmark index options contract expiring on Tuesday or Thursday. All other equity derivatives for example, single-stock futures and options would have a minimum one-month tenor, expiring in the last week of the month, but again only on one of the two designated days.

Among other things, exchanges would need to get SEBI’s prior approval for any new contracts or changes to existing expiry or settlement days. It represents a notable expansion of regulatory oversight designed to temper the growth and complexity of the derivatives market.

Public comment on the proposals is welcomed until 17 April. The outcome of this consultation will inform the final framework and timeline for implementation.

For now, though, investor reaction indicates a wait and watch attitude toward the ramifications of more stringent controls over derivatives activity — with BSE Ltd under the hammer.

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