Battle of the Bourses: NSE vs. BSE Amid SEBI’s F&O Crackdown
The stock market is no stranger to competition, but the latest SEBI crackdown on the Futures and Options (F&O) segment has turned up the heat between India’s two major exchanges—NSE and BSE. With volumes shrinking, both are now fighting harder than ever to retain their market share.
The Boom Before the Storm
The past four years have been a dream run for Indian stock exchanges. A strong bull market and a flood of new investors fueled record-breaking profits. NSE, the country’s largest stock exchange, posted a stellar 57% and 94% year-on-year profit growth in the last two quarters of FY25, respectively. Meanwhile, BSE doubled its profits almost every quarter over the past two years, barring Q4 FY24.
But, as market veterans say, “Nothing lasts forever.” A sharp market decline since September, coupled with SEBI’s new F&O restrictions, has taken the wind out of the rally. The total F&O turnover, which peaked at ₹32,734 lakh crore in Q2 FY25, has now plunged to ₹15,205 lakh crore—a staggering 50% drop.
SEBI’s Crackdown: The New Reality for Traders
SEBI’s new measures aim to curb excessive retail participation in F&O trading, driven by concerns over uninformed speculation. This has hit both stock exchanges hard, with NSE’s daily turnover falling 38% and BSE’s declining 19%.
For exchanges, lower trading volumes translate to lower revenues, and with SEBI tightening the screws, the battle for market share is intensifying. An NSE spokesperson downplayed the rivalry, stating, “Stock exchanges are frontline regulators, so competition is not a primary concern.” However, market realities tell a different story—profitability and valuations are at stake.
BSE’s Fightback: The Smart Moves That Worked
Under MD & CEO Sundararaman Ramamurthy, BSE has been on a turnaround journey. A key move was shifting Sensex F&O expiry from Thursdays to Fridays, followed by Bankex expiry moving to Mondays. Additionally, introducing single-stock derivatives and unique index products helped BSE gain traction.
Another tailwind was SEBI’s rule allowing only one index per exchange for weekly expiries—this led to the discontinuation of NSE’s Bank Nifty weekly contracts, creating an opportunity for BSE. As a result, BSE’s market share in F&O surged from 4.2% in Q2 FY24 to 36.8% in the ongoing quarter. Investors rewarded this shift, sending BSE’s stock price up 140% from July 2024 to January 2025.
However, the rally was short-lived. Since February 20, BSE shares have tumbled 30%, following SEBI’s proposal to switch from notional terms to a delta-based approach for open interest calculation. Goldman Sachs promptly cut its target price for BSE, citing risks to its high reliance on proprietary traders—who account for 70% of its daily turnover.
NSE’s Counterattack: A Direct Face-Off with BSE
With its dominance challenged, NSE is striking back. The biggest move? Changing its F&O expiry to Mondays from Thursdays, effective April 1—directly clashing with BSE’s Bankex expiry.
NSE MD & CEO Ashish Chauhan defended the decision, stating that multiple expiries across different days contradict SEBI’s goal of reducing daily expiries. “If the objective is to limit expiries, the logical approach is to have a single expiry day,” he argued.
BSE, on the other hand, has been more cautious. Ramamurthy remains non-committal about any counteraction, waiting to see how the market reacts before making another move.
What Lies Ahead? The Tug-of-War Continues
Analysts believe that NSE’s Monday expiry could hurt BSE’s turnover. Motilal Oswal estimates a 10-15% hit on BSE’s premium turnover, with traders likely shifting back to NSE. Historically, BSE has seen 20-22% market share on Mondays and 15-17% on Fridays—volumes that may now flow to NSE.
Deepak Jasani from HDFC Securities predicts a monopolistic scenario if NSE dominates Monday expiries, forcing BSE to respond with another expiry change. “This back-and-forth will continue until SEBI steps in,” he says.
Final Thoughts: Will SEBI’s Rules Reshape the Market?
The SEBI crackdown has already reshaped India’s F&O landscape. With stricter regulations, fewer weekly expiries, and larger contract sizes, retail traders have been pushed to the sidelines. The once-thriving derivatives market is now a battleground for NSE and BSE, with no clear winner yet.
Will BSE strike back with another innovative move? Or will NSE regain its lost ground? One thing’s for sure—the battle of the bourses is far from over.