BSE-NSE: How The Two Stock Exchanges Fared In Second Quarter

The performance of India’s two stock exchanges diverged in the quarter ended September, as one was impacted by higher employee costs and exposure to beleaguered IL&FS Group and the other captured the market volatility well.

Revenue from operations of National Stock Exchange Ltd. rose 20 percent, while that of BSE Ltd. fell 5 percent during the July-September period, according to their quarterly releases.

Asia’s oldest stock exchange’s revenue fell because of an 8 percent decline in transaction charges revenue. BSE in August had revised transaction fees to counter weak sentiment in the equity segment. Its profit was also impacted due to increased employee charges and provision for diminution in value of secured non-convertible debentures of Infrastructure Leasing & Financial Services Ltd. BSE, with a total exposure of Rs 17 crore towards these NCDs, has a provision of Rs 3.4 crore. This led a 20 percent year-on-year decline in its profit at Rs 53.78 crore during the reporting period.

On the other hand, higher transactions in the equity and derivatives segments boosted the profit of the country’s largest stock exchange. NSE’s profit after tax jumped 30 percent on a yearly basis to Rs 368.71 crore in the three months ended September.

During the quarter, the exchange earned Rs 267.9 crore from co-location. This forms 42.4 percent of NSE’s revenue from operations, according to BloombergQuint calculations. As of September-end, Rs 1,709 crore was transferred to a separate bank account. The entire amount has been invested in liquid schemes of mutual funds pending directions from the Securities and Exchange board of India.

This comes at a time the market regulator issued three show cause notices to NSE in its probe into the alleged preferential access given to some high-frequency traders. The bourse filed a second consent application to resolve the issue with SEBI.