Moreover, discount brokers, who depend heavily on retail investors, are expected to be more affected than traditional full-service brokers.
Sebi, in its consultation paper in July, proposed seven measures, including increasing minimum contract size and upfront collection of option premiums, intra-day monitoring of position limits, rationalisation of strike prices, removal of calendar spread benefit on expiry day and increase in near contract expiry margin.
Sebi stated that these measures are aimed at enhancing investor protection and promote market stability in derivative markets.
According to a report by Jefferies, Sebi's proposed measures to reduce the number of weekly option contracts from 18 to 6 could impact around 35 per cent of industry premiums. However, if trading shifts to the remaining contracts, the overall impact can be reduced to 20-25 per cent.
Among its 7 proposed measures, IIFL Securities see the highest impact from the withdrawal of weekly options (only 1 per exchange allowed) as index Options account for 98 per cent of the volumes.
IIFL Securities expects the National Stock Exchange (NSE) to be more affected than the BSE because 60 per cent of NSE's revenue comes from options trading, compared to 40 per cent for BSE. It estimates that by the financial year 2026, NSE's earnings could be reduced by 25-30 per cent while BSE's earnings could drop by 15-18 per cent.
Jefferies also believes that removal of Bankex weekly contract can impact BSE's earnings per share (EPS) by 7-9 per cent over FY25-27.
It further said that BSE might see a small decline in earnings, but if trading activity shifts from discontinued products, it could offset the impact or even lead to earnings growth.
