Indian brokerages fall as Sebi proposes curbs on options

Bengaluru: Shares of Indian brokerages fell on Wednesday, a day after the markets regulator proposed several measures to curb trading in options.

The Securities and Exchange Board of India (SEBI) on Tuesday evening proposed raising the minimum trading amount for index options by over three times, reducing the number of contracts expiring each week and hiking margins.

Shares of Angel One, 5Paisa Capital, SMC Global Securities, Motilal Oswal, Geojit Financial, Dolat Algotech and IIFL Securities fell between 1 per cent-5 per cent.

"Exchanges and retail focused brokers will be most impacted. Highest impact can come from reduction in the number of weekly option contracts," Jefferies said in a note.

"BSE can offset impact and even gain, if volumes spillover from discontinued products to those which are continued."

Shares of exchange operator BSE rose 6 per cent.

India has been flagging risks from speculative trading by retail investors, who have been funnelling savings into its booming options market. Last week, the government raised the tax derivative transactions.

In fiscal year 2024, over 90 lakh individuals and firms dabbled in index derivatives and incurred a loss of Rs 51,748 crore, as per a SEBI discussion paper.

Investec expects a 30 per cent drop in number of derivative orders per client for Angel One and sees it raising prices to Rs 25 per order from Rs 20.

Angel One has slipped more than 39 per cent so far this year, the top loser among brokerages, while Dolat Algotech and Motilal Oswal are the top gainers, up 117 per cent and 113 per cent, respectively.

India's largest discount brokerage, Zerodha, does not expect a large impact on trading volumes.

"The suggested changes, even with the securities transaction charge increase, won't really change options volumes," Nithin Kamath, CEO and co-founder of Zerodha, said on social media platform X.

($1 = 83.6980 Indian rupees)