BSE Ltd

NSE:BSE

Earnings Call Transcript 2022-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to BSE's Q1 FY 2022 Earnings Conference Call. My name is Faizan, and I will be the moderator for today's conference. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Yogesh Joshi, Head, Investor Relations, BSE Limited. Thank you, and over to you, sir.

[Yogesh Joshi, Head of Investor Relations]

Thank you. Hello, everyone, and welcome to BSE's earnings call to discuss Q1 FY '22 results. This is Yogesh from Investor Relations. Joining us today on this earnings call is BSE's leadership team consisting of Mr. Ashish Kumar Chauhan, Managing Director and Chief Executive Officer; Mr. Nayan Mehta, Chief Financial Officer; Mr. Sameer Patil, Chief Business Officer; Mr. Girish Joshi, Chief Trading, Operations and Listing Sales; Mr. Kersi Tavadia, Chief Information Officer. Do note that the conference is being recorded, and the transcript of the same will be available on our website. The financial results and investor presentation are also available on our website. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Any forward-looking statements that we'll make on this call are based on assumptions as of today, and BSE assumes no obligation to update these statements as a result of new information or future events. I would now request Mr. Ashish Kumar Chauhan to give a brief overview of the company's performance, followed by a question-and-answer session.

[Ashish Kumar Manilal Chauhan]

Thank you, Yogesh. Good evening, everyone, and thanks for joining the call today. We are almost 1.5 years since the onset of COVID-19 pandemic. I believe many of us have taken the required doses of COVID vaccine and look forward to resume our daily schedules similar to one before COVID-19 in spite of the apprehensions of third wave of the pandemic in the near future. BSE, too, as a socially responsible corporate, has supported various entities under COVID relief efforts, as expected from BSE, has continued to operate without any interruptions and glitches during this period. I will start with the broad financial results. This quarter ending 30th June 2021, BSE's operational revenues have grown by 52% as compared to corresponding quarter in the previous year. Further, BSE net profit grew by 61% for the quarter ended 30th June 2021 to INR 53.42 crore as compared to INR 33.15 crore in the corresponding quarter of the previous year. The growth in revenue and profits is mainly due to growth in operational revenues across business segments. Let me start by covering our primary market segment. During the quarter ended 30th June 2021, in spite of the lockdowns due to emergence of second wave of pandemic, various issuers raised over INR 45,242 crores through 76 issues on BSE BOND platform. BSE BOND platform continues to be the preferred choice by Indian corporates to raise debt capital markets through private placements, structured instruments, public issues and also municipal corporation bonds for issuing municipal bonds. Various issuers also raised more than INR 1,657 crores through IPOs, preferential and rights issues during the first quarter of the financial year 2021-'22. The above is in addition to over INR 3,04,157 crore of privately placed debt and commercial papers listed on BSE during the same period. The total number of investors registered with BSE have been consistently growing and, currently, they stand over INR 7.6 crores as of date. I'll now update on you the trading platform and BSE starting with Equity segment. BSE's average daily turnover in the equity segment increased by 52% from INR 3,724 crore in first quarter of financial year 2021 to INR 5,661 crore in the first quarter of financial year 2021-'22. The same is also reflected in the company's strong operational performance in the current period. BSE's market share Equity segment increased from 6.3% for the quarter ended June 30, 2020, to 7.2% for the quarter ended 30th June 2021. As mentioned in our earlier earnings call, we are seeing increasing participation from high-frequency traders. Further, enablement of base price execution by certain large broking houses has also resulted in the increased turnover in our Equity segment. However, BSE is yet to realize the full potential and benefit of interoperability across clearing corporation. It has been observed that many trading members are not yet providing the facility of interoperability across clearing corporations to their clients. This has resulted in the benefits of interoperability, as envisaged by SEBI, like netting off trades across exchanges, lower margins, et cetera, not being offered to investors. Further, interoperability also facilitates base price execution of trades across exchanges. Delays in implementation of interoperability leads to delay in base price execution, thereby depriving the investor of execution on their orders at best possible rates. In interest of investors, penalty has been imposed on trading members for not extending basic price execution facility to all clients, with effect from 1st July 2021. It will be noted that BSE has increased its transaction charges in the Equity segment effective March 1, 2021, to bring it in line with the competing exchange.BSE's Equity Derivatives segment average daily turnover increased by 80x from INR 3,848 crore in the first quarter of financial year 2020-'21 to INR 3.15 lakh crore in the first quarter of financial year 2021-'22. BSE's market share in the Equity Derivatives segment increased from 0.3% for the quarter ended June 30, 2020, to 6.5% for the quarter ended June 30, 2021. The launch of Sensex 50 contracts with a differentiated expiry date from 29th June 2020 attracted a lot of attention and interest from the market participants. It is expected that growth in BSE index derivatives would set grounds for growth in stock derivatives and BSE's equity segments, too, over time.BSE is India's second largest commodity derivatives exchange in India and offers a wide gamut of products across agri and non-agri segments. The average daily turnover in our Commodity Derivatives segment for the quarter ended 30th June 2021 increased to INR 3,267 crore as compared to INR 3,156 crore for the same period in previous financial year. BSE's market share in Commodity Derivatives segment increased from 2% for the quarter ended 30th June 2020 to 9.1% for the quarter ended 30th June 2021. Currency Derivatives segment continues to provide a very liquid platform for trading in currencies. The average daily turnover in our Currency Derivatives segment for the quarter ended on 30th June 2021 increased by 29% to INR 23,618 crore as compared to INR 18,325 crore for the same period in previous financial year. With increasing focus on Make in India products and Atmanirbhar Bharat, small and medium enterprises need to be provided with capital to enable their growth. BSE has been encouraging and growth with governance of SMEs in India through listing on its BSE SME platform. As on 30th June 2021, 340 companies were listed on BSE SME segment. The said companies have raised funds amounting to INR 3,515.93 crores. The market capitalization of these companies listed on BSE SME segment as on exceeded INR 29,020 crores. BSE's market share in listing of companies in SME segment stood strong at 61% as of 30th June 2021. BSE is the first exchange in India to launch startup platform in December 2018 for promoting listing of startup in IT, ITES, biotech and many other high-tech industries. 10 startups have already raised INR 34.62 crores on this platform, and are listed on this platform as on 30th June 2021. I shall now discuss Mutual Fund Distribution platform. BSE StAR MF, India's largest Mutual Funds Distribution platform, set new records in the current financial year. The total number of transactions on BSE StAR MF during the quarter ended 30th June 2021 grew by 90% to 3.54 crores transactions as compared to 1.86 crore transactions during the quarter ended 30th June 2020. Thus, the average daily number of transactions on BSE StAR MF during the quarter ended 30th June 2021 was 5.8 lakh as compared to 3.15 lakhs for the quarter ended 31st March 2020. The platform recorded highest number of transactions in a single day of 19.51 lakh transactions on 12th July 2021, surpassing the previous base record of 17.84 lakh on 12th April 2021. BSE StAR MF platform is the platform of choice for investment in mutual funds by investors. It continues to witness consistent net equity inflow over the industry's net equity inflow. BSE StAR MF platform recorded a net equity inflow of INR 6,072 crore as compared to industry's net equity inflow of INR 5,988 crore for the quarter ended 30th June 2021. BSE StAR MF platform continues to scale new peaks of transactions every month. The platform has increased the record of 17.84 lakh transactions on a single day on 12th April, surpassing the previous best record of 15.52 lakh transaction on the 5th April 2021. The BSE StAR MF app launched in May 2019 to help Mutual Fund Distributor registered clients on a real-time basis and execute paperless transactions, has been well received by the investment community and has processed over 26 lakh transactions till date. BSE promoted International Exchange in Gift City, Gandhinagar. India INX has been growing exponentially ever since it commenced trading activities in January 16, 2017. Average daily trading turnover on India INX during the quarter ended June 30, 2021, increased by 522% to USD 11.97 billion as compared to USD 1.92 billion during the previous quarter ended 30th June 2020. It has witnessed all-time high turnover of over USD 30.30 billion on March 10, 2021. Previous all-time high turnover was USD 28.24 billion on 4th March 2021. This increased trading activity validates the new products and initiatives taken by India INX and reflects growing interest in IFSC among the broking fraternity. Even during the COVID-19 pandemic and lockdown, India INX was operational for 22 hours nonstop and has maintained its leadership as the #1 exchange in IFSC.India INX is dominant IFSC exchange in GIFT City, with the market share of 87% in derivatives trading and 100% in bond listing for the quarter ended 30th June 2021. Owing to investments by certain strategic and financial investors, BSE's stake in India INX has come down to 79.78%, and BSE's stake in India International Clearing Corporation has been brought down to 72.1% as of 30th June 2021. BSE Ebix Insurance Broking Private Limited, a joint venture of BSE and Ebix Fincorp Exchange Pte Ltd., is registered with Insurance Regulatory and Development Authority of India has Direct Life and General Insurance Broker. Currently, its electronic insurance broking platform is integrated with 7 general insurance companies, 5 health insurance companies and 3 life insurance companies. Further, pending integration, portal of insurance companies is being used for certain insurance companies to facilitate intermediation of policies. BSE Ebix has over 4,400 active certified point of sales. The number of policies intermediated by BSE Ebix increased by 9% to 1,517 during the quarter ended 30th June 2021 as compared to 1,388 during the quarter ended 30th June 2020. The gross premium collected during the quarter ended 30th June 2021 rose by 4.5x to INR 2.83 crore as compared to INR 52 lakhs during the quarter ended 30th June 2020. BSE holds equity stake of 40% through its subsidiary, BSE Investments Limited. BSE E-Agriculture Markets is a JV between BSE Investments and Frontier Agricultural Platforms Private Limited, operates a nationwide, electronic, institutionalized, transparent commodity spot trading platform to facilitate spot agricultural commodities transitions across value chain, consisting of producers, intermediaries, ancillary servers -- services and consumer. It has already enrolled 518 members, including 441 farmers and 10 FPO members. 199 trades worth INR 139 lakhs in 6 agricultural commodities were executed on the platform during the quarter ended 30th June 2021. Considering the market and opportunities, this platform is expected to grow at a faster pace in time to come. Regulatory approval has been sought for enabling spot trading of non-agricultural commodities on this platform. As informed in our earlier calls, the power market regulator, Central Electricity Regulatory Commission, has granted registration on 12th May 2021 to Pranurja Solutions Ltd., to establish and operate a power exchange. The company proposes to commence the live operations sometime during the current financial year 2021-'22, BSE has a stake of 22.61% in the proposed power exchange, through its wholly-owned subsidiary, BSE Investment Limited. On a consolidation -- consolidated basis, BSE's operational revenues grew by 52% to INR 103.22 crore for the quarter ending 30th June 2020 to INR 156.95 crore for the quarter ended 30th June 2021. The transaction charges revenue has increased by 93% from INR 30.25 crore for the quarter of -- ending 30th June 2020 to INR 58.43 crore for the quarter ended 30th June 2020 (sic) [ 2021 ].. Listing-related fees increased by 25% from INR 39.08 crore for the quarter ending 30th June 2020 to INR 49.07 crore for the quarter ended 30th June 2021. Book building fees also supported growth in operational revenues. Book building fees increased by 30.7x from INR 1.82 crore for the quarter ending 30th June 2020 to INR 8.48 crore for the quarter ended 30th June 2021. The [ clearing and settlement ] operational revenue has also increased by 88% from INR 9.99 crore for the quarter ending 30th June 2020 to INR 18.78 crore for the quarter ended 30th June 2021. Net profit attributable to shareholders of the company increased by 61% from INR 33.15 crore for the quarter ended 30th June 2020 to INR 53.4 crore for the quarter ended 30th June 2021. The operating EBITDA has increased by INR 55.08 crore to INR 41.31 crore for the quarter ended 30th June 2021 as against operating loss of INR 13.77 crore for the quarter ended 30th June 2020. Operating EBITDA margin stands at 26% for the quarter ended 30th June 2021 as against negative 13% for the quarter ended 30th June 2020. The net profit margin has increased from 20% for the quarter ended 30th June 2020 to 28% for the quarter ended 30th June 2021. Before I conclude, I wish to say that India seems to be entering a third wave of pandemic. And I wish everyone in this call to stay safe and healthy with their near and dear ones and follow all the COVID protocols that government has prescribed. With this overview, let me welcome you once again and invite all of you for a question-and-answer session. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Devesh Agarwal from IIFL Capital.

[Devesh Agarwal, Assistant Vice President]

And many congratulations on good set of numbers and performance. So firstly, I wanted to understand, sir, the increase in turnover. Although you touched upon that higher contributions from agro traders and some of the large brokers have been one of the reasons. If you can throw some more light in terms of what has been the real drivers just for us to understand the sustainability of this increase in the volumes. And secondly, you mentioned some of the brokers have not yet implemented interoperability. I just wanted to understand, if this were to happen, what would be the increase in the volumes? That would be my first question, sir.

[Ashish Kumar Manilal Chauhan]

So basically, in terms of sustainability, what happens is whenever markets go up, usually volumes go up, which you have seen even in other exchange over the last few months. And so BSE is also a beneficiary of that to some extent. And the interoperability is another large driver for us because many brokers who are not even offering BSE-related services have started offering. And so that is a early sign. It's early days. But hopefully, this will pick up, and many people will be able to also understand that if you buy any share on BSE, you get the same dividend as if you were to buy the same share on any other exchange. So it's not that you get dividend less or more on any exchange, but sometimes it has been projected that way. And a number of trades has increased on a peak basis from around 18 lakhs to close to 50 lakhs, and average, we are going above almost 30 lakhs, 32 lakhs. So that also tells you that number of trades have increased, although the value per trade has come down because a lot of people are doing algorithm trading. And that -- probably the number you might like to watch that, currently, on a -- if you take away the blocks, the average value per transaction has now come down to INR 15,000 per transaction on equity market. And so these are some of the pointers you might like to keep in mind. Otherwise, basically, this interoperability, in some ways, has brought in a new set of investors who were never been allowed to trade on BSE because of their brokers not wanting to connect, although they are members on both sides. And only for exclusive stocks of BSE, we were allowing -- at least some of them are allowing those orders to pass on to BSE. But now I think all of them are opening up due to these new regulations.

[Devesh Agarwal, Assistant Vice President]

Understood.

[Ashish Kumar Manilal Chauhan]

Of course, one more thing helped is that in February and February 24, 2021, the competing exchange closed down for 4 hours. And that also gave them realization, many of them, that depending on only 1 party to run your life is a dangerous activity. And I think that has also helped people come to the interoperability in some ways.

[Devesh Agarwal, Assistant Vice President]

Okay. Right. If you can, sir, share the name of some brokers who have kind of implemented this interoperability, which has led to higher volume for us. And also, if you have done any exercise wherein if you assume that all the large brokers, if they move to interoperability, would our market share increase to, say, 12%, 15%? Have you done any such exercise?

[Ashish Kumar Manilal Chauhan]

You can always do such exercises. The proof of pudding is in the eating, and you have seen the market share increase, which was going down for a long period. We won't be able to give any name on the brokers due to reasons of confidentiality.

[Devesh Agarwal, Assistant Vice President]

Okay, sir. And sir, have you taken any increase in the tariff for the exclusive segment also in this quarter?

[Ashish Kumar Manilal Chauhan]

Exclusive segments, there is no interoperability because of the fact that they are exclusive stocks. Once they get listed on other exchange, then they start coming into interoperability.

[Devesh Agarwal, Assistant Vice President]

No, sir. I was asking for the tariff. Has there been any...

[Ashish Kumar Manilal Chauhan]

Tariff remains the same. Tariff on exclusive stocks remains the same as earlier.

[Devesh Agarwal, Assistant Vice President]

Because the number looks to be slightly higher based on the volume that we report. So on per lakh turnover, the number looks to be higher on the tariff. So is there any one-off income in the exclusive segment, sir?

[Ashish Kumar Manilal Chauhan]

No, no. What happens is, today, if you see the smaller stocks, they have gone up also in value, which was not the case earlier. And so the number of transactions, the value of transactions also increased slightly. And that's why you see that -- because we don't give the details of exclusive versus non-exclusive on the transaction charges, that's where, basically, you get a little here and there, but it's not that large.

[Devesh Agarwal, Assistant Vice President]

Okay. And final 2 questions, sir. You mentioned that power exchange is likely to start this year. So any time lines as to when you are targeting to start that? And what would be the free cash on the books at the consol level?

[Ashish Kumar Manilal Chauhan]

So basically, in a way, we own currently around 22% plus on that exchange. And our cash on book as of now, I'll tell our CFO to give you as of now.

[Nayan Chandrakant Mehta, Chief Financial Officer]

It's around INR 1,360 crores, which is...

[Devesh Agarwal, Assistant Vice President]

INR 1,360 crores?

[Nayan Chandrakant Mehta, Chief Financial Officer]

INR 1,360 crores.

[Ashish Kumar Manilal Chauhan]

INR 1,360 crores is the current cash, free cash right now. But if you take in subsidiaries and all, it would...

[Nayan Chandrakant Mehta, Chief Financial Officer]

In order to be about INR 2,200 crore, right?

[Ashish Kumar Manilal Chauhan]

So INR 2,200 crores on subsidiaries put together.

[Devesh Agarwal, Assistant Vice President]

Okay. And for power exchange, sir, I was asking when are you likely to start the operations?

[Ashish Kumar Manilal Chauhan]

Power exchange should happen, they have already appointed a person to run it, who has an experience in that business. And now he's taking the charge. Broadly speaking, the technology first portion is ready, the beta, or I would say, pre-beta testing with some of the members have started. And so it's early days, but who knows because there are still steps to going live, including the final approvals and all. So I mean, I wouldn't be able to hazard a guess on when the final approvals come and whatever the extra changes in technology that is required. But broadly speaking, they seem to have gone ahead with the pre-beta testing already.

[Operator]

The next question is from the line of Santosh Keshari from Keshari & Co.

[Santosh Keshari]

Hello. Am I [ audible ]?

[Ashish Kumar Manilal Chauhan]

Yes, please.

[Santosh Keshari]

Yes. Congratulations for such a fantastic performance. It's heartening to see that BSE is doing so well, and we have been waiting for this for a long time. So my question is about the income from investments and deposits. In the quarter 1 of 2020, we had INR 47 crores odd income. And in this quarter, we have just INR 17 crores. So any reason that this has come down drastically, almost by 66%, like 2/3 in this quarter?

[Ashish Kumar Manilal Chauhan]

So Santosh, it is like this that -- in the first quarter of 2020, this was after the COVID had started. So in the month of March, there was -- March '20, there was a big drop in the values, values of all investments because everybody feared that they will be default after COVID started. And this whole thing rebounds by the end of June. So what happened is that, that the values of all the -- all our investments, which are basically into mutual funds, those NAVs went up drastically. And because of that, there was a lot of mark-to-market, which we had to book as a part of the accounting standard guidelines. That resulted in booking INR 47 crores, majority in booking for about INR 47 crores in that particular quarter. If you come back to this quarter, current quarter in June 2021, the yields have actually risen in this quarter, resulting in NAVs going down. And because the NAVs are going down, or maybe remaining stable, there have been certain reductions also, which we have been able to mix which have been -- which are scheduled. So you see that those -- so since we have a normal scenario, where the mark-to-market is minimal, you'll find that our investment income has come down to INR 17 crores for this quarter. And this is based on the existing investment yield scenario, currently in line with the same.

[Santosh Keshari]

Okay. So in that case, what could be the baseline that we can consider, if we keep aside the MTM number, that BSE can expect to earn from its funds?

[Ashish Kumar Manilal Chauhan]

So see, you can take it like this, that there is no, nothing exceptional in the -- nothing majorly exceptional in the current quarter and probably that way, you can estimate. Obviously, there will be some good income, which will come from our associated subsidiary. So that might -- that might -- that would be another thing. Otherwise -- but basically, if you look at the Indian accounting standards, the companies with a lot of money at hand or cash at hand or, well, balances at hand, we'll see a lot of volatility going forward also in the other income.

[Santosh Keshari]

Definitely, Mr. Chauhan. So what I understand is that INR 17 crore is the amount or something like INR 20 crore is the amount that we can expect to go on, on quarter-on-quarter, normally as our realized gain from investments.

[Ashish Kumar Manilal Chauhan]

Yes. And then we had some dividend, which we get from our strategic investments. Whatever we get.

[Operator]

The next question is from the line of [ Jagadeesh Raiala ], individual investor.

[Unknown Attendee]

Am I audible?

[Ashish Kumar Manilal Chauhan]

A bit louder, please?

[Unknown Attendee]

Hello? Yes. Can you hear me?

[Ashish Kumar Manilal Chauhan]

Okay.

[Unknown Attendee]

Yes. Congratulations on a great quarter. So one question I had is on the competition side. So the volumes currently have seen like pretty less compared to the largest...

[Operator]

Mr. Raiala, sorry to interrupt you. This is the operator. Sir, we can't hear your audio clearly. I would request you to increase the volume of your device, sir, or speak a little bit louder.

[Unknown Attendee]

Yes. Yes. Hello?

[Operator]

Yes, please go ahead.

[Unknown Attendee]

Yes. So my question is on the competition side, like on the largest exchange, basically, the volumes are pretty high compared to our company. So how do you plan to tackle this to increase the volumes going forward?

[Ashish Kumar Manilal Chauhan]

It is what -- a perennial question. And we continue to work hard to provide better services, better technology and hope that people come to BSE to trade. Of course, the interoperability and the base price execution and the things do help. But it's a way of innovations, creating newer products, newer instruments, whatever is allowed to us in the highly regulated environment. And I hope that using newer products like IPOs or bonds or commercial papers, people see our services and they come and trade more, including interoperability. And of course, some people also get to know that it's important to have sort of order flow going to more than 1 exchange because of the risk that they carry by going through only 1 exchange and so on and so forth. There are many ways we are trying to bring it, and it will continue.

[Unknown Attendee]

Okay. Interoperability is really important. So hopefully, there's more of -- more brokers come in. I think that's the key reason.

[Operator]

The next question is from the line of [ Pratik ] from Civica India.

[Unknown Analyst]

Am I audible now?

[Ashish Kumar Manilal Chauhan]

Yes. A little bit.

[Unknown Analyst]

Firstly, many congratulations to Ashish sir and entire BSE team for putting up an exceptional show in this quarter. Ashish sir, I just want to understand after going through that investor presentation, in that the market share for the equity derivatives and equity cash is around 7%, 7-odd percent. Just want to understand that, do you think that this will go upward in the coming future? And what's the company thinks that -- how you strategically apply to increase this market share in this -- particularly this equity derivatives and equity cash segment?

[Ashish Kumar Manilal Chauhan]

Basically, the market share has increased manyfold especially in derivatives. Equities also, I mentioned to you about interoperability and the base price execution, better technology, better services, lower costs, lower cost of connecting to us, more efficiency and so on and so forth. So that will continue to be a strategy for the equity derivatives, currency derivatives, interest rate derivatives, commodity derivatives. And in fact, commodity derivative also you didn't ask. We are almost touching 10% market share, and we have become second largest commodity exchange in India. And in options, where, in equity derivatives, options are ruling the roost, right? And commodities also, given the CTT that is applicable on futures or options, we think market is going to develop more towards options, and we are becoming 70% of that market options on goods. And so there are things we are doing, there are things which are helping us due to our technological superiority that hopefully will bring the new investors, new traders, old investors and everyone else. On quarter-on-quarter also, if you see our equity market volume growth on a higher sort of volumes is now 8% plus, while the earlier -- immediate previous quarter, it was close to 5%. And so that is where, basically, you can see there is a movement. How fast, how far, all those things still remain a matter of conjecture and only time will tell, but our work will continue.

[Operator]

The next question is from the line of Pritesh Chheda from Lucky Investments.

[Pritesh Chheda, Analyst]

Well, 2 questions. One, we had taken the transaction charge increase on the BSE Stock Exchange. So when was it taken? And how much of it has flowed in quarter 1? Or how much is likely to flow in incremental quarters?

[Ashish Kumar Manilal Chauhan]

See, transaction charges well, as I said in my speech, it was on March 1, 2021, and it was around a 10% increase. So that's what you can count on if the volumes remain the same.

[Pritesh Chheda, Analyst]

But when I look at the Q-o-Q revenue, it's the same. So it seems that 10% transaction charge does not flow through the revenue. Or I'm interpreting it differently?

[Ashish Kumar Manilal Chauhan]

I think you are interpreting differently because there is a clear increase in revenue due to the transaction charges on equities.

[Pritesh Chheda, Analyst]

So on a Q-o-Q basis, considering that the BSE volumes were largely flat, which of the piece of our business and the overall revenue has come down to offset that 9%, 10% increase in the transaction charge?

[Nayan Chandrakant Mehta, Chief Financial Officer]

No, I'll tell you, it's like this, that our -- we had increased the charges from March 1. And so obviously, we had 1 month increase already factored in the previous quarter. And in the current quarter, there has been a type of more activity in the mid-cap side of the market, which has resulted in -- if you see our -- if you have gone through our presentation, you will find that our exclusive income has grown -- have gone up significantly in the current quarter. And that doesn't mean -- and that is one of the big reasons where -- while the broader market was the more or less same as compared to previous quarter. We got higher revenue in the current quarter. We got higher revenue on some of the exclusive segments, where we did not increase any charges. So revenue from operations has gone up from INR 103 crores to INR 156.95 crores. So in a way, it's almost...

[Pritesh Chheda, Analyst]

Sir, I am analyzing Q-o-Q, sir, whatever in...

[Nayan Chandrakant Mehta, Chief Financial Officer]

Yes. If you look Q-o-Q also, our equity income in previous quarter was INR 36 crores, which is INR 47 crores.

[Pritesh Chheda, Analyst]

So then there has to be some other income, which has to come down for the revenue to be flat Q-o-Q, right?

[Ashish Kumar Manilal Chauhan]

But INR 36 crore to INR 47 crore cannot be considered flat numbers.

[Nayan Chandrakant Mehta, Chief Financial Officer]

Okay. I'll tell you. On the presentation you are looking at now.

[Pritesh Chheda, Analyst]

No, what's your total? Yes.

[Nayan Chandrakant Mehta, Chief Financial Officer]

What you are seeing is total? So if you see total transaction charges, yes, you are seeing the -- fixed currency. Let me find out.

[Pritesh Chheda, Analyst]

I'll again rephrase my question.

[Nayan Chandrakant Mehta, Chief Financial Officer]

Page number...

[Pritesh Chheda, Analyst]

If you see your total revenue, revenue from operation is INR 157 crores versus INR 152 crores. So there is a 3% increase. But the transaction charge is about 10% increase. So there has to be some portion of the business where there is either some softness or there is some other interpretation is what I want to.

[Nayan Chandrakant Mehta, Chief Financial Officer]

Yes, I got it. I got your point. See it's like this that there is a decrease in the revenue from listing and book building services as compared to previous quarters. In the previous quarter, while listing, our services to corporates was INR 66 crores, it has become INR 58 crores, INR 58.5 crores. So that is what explains what we are seeing, the flattishness in our revenue from operations. Then the securities side, on the trading side, it increased from INR 71 crores to INR 84 crores.

[Pritesh Chheda, Analyst]

Okay. Now that explains it, sir.

[Nayan Chandrakant Mehta, Chief Financial Officer]

Listing has 2 aspects to it. One is what I call the annual revenue, which is basically the listing -- annual listing fees, which is a large portion. And then there is an additional portion of the IPOs and bond distribution model, for software or buybacks and all. So that is where there is volatility usually.

[Pritesh Chheda, Analyst]

Okay. And my second question is on the BSE MF platform where we are doing about INR 10 crore quarterly revenue, is it operationally profitable? Or at what scale should it be a substantial operating profit generator?

[Nayan Chandrakant Mehta, Chief Financial Officer]

It is operating profit.

[Pritesh Chheda, Analyst]

It's operationally profitable?

[Nayan Chandrakant Mehta, Chief Financial Officer]

Yes.

[Pritesh Chheda, Analyst]

Can you quantify how much operationally profitable it is?

[Nayan Chandrakant Mehta, Chief Financial Officer]

So if you've taken on a round-off basis, right, our profit before tax would be around 35%. So on this business, it can vary from time to time depending on the number of transactions, but they are generally increasing. So obviously, we have got good margins here.

[Pritesh Chheda, Analyst]

It's 35% on the revenue of the BSE MF platform?

[Nayan Chandrakant Mehta, Chief Financial Officer]

Yes.

[Pritesh Chheda, Analyst]

Okay. And just, sir, just associated question. What would be your market share then in the total transactions of MF? So online, off-line, whatever modes, you have given a market share on the inflow side, but on the total transaction side?

[Nayan Chandrakant Mehta, Chief Financial Officer]

We are not aware of the total number of transactions, but we are doing around 1.3 crore transactions a month. But if you know the rest of the industry put together, then you will be able to figure out what is happening. And we are growing at 90% year-on-year. And so you can see -- I mean, that is last till now, that doesn't mean we will grow at that level for the next 100 years. But broadly, you can see where I'm going.

[Operator]

The next question is from the line of Anush Kumar from B&K Securities.

[Anush Kumar, Research Analyst]

Congratulations on an excellent set of numbers, and very happy to see the oldest exchange performing good manners. My question is on the transaction charges on StAR mutual fund. If you could tell me what is the current blended realization, sir?

[Nayan Chandrakant Mehta, Chief Financial Officer]

The blended realization currently is around INR 3.4 per transaction.

[Anush Kumar, Research Analyst]

So has it fallen from the last quarter? If I'm not wrong, it is INR 3.6?

[Nayan Chandrakant Mehta, Chief Financial Officer]

Yes, by a few bps, it has fallen, and because the number of transactions have increased drastically. And what happens is that when -- as the transaction number increase, obviously, because of the cost structure and the revenue structure.

[Ashish Kumar Manilal Chauhan]

That might save people going to higher slab, we charge lower per transaction.

[Anush Kumar, Research Analyst]

Okay. The next question is on the value unlocking. Do you see this as next CDSL on seeing the extraordinary potential?

[Ashish Kumar Manilal Chauhan]

It's a good question. When CDSL was with BSE, nobody saw it as a potential, right? So that is true. People go in search of monopolies. And monopolies for 10 years can give you bad results compared to not so monopoly, and just you can see even in this quarter. One of our peer for 10 years is a monopoly, but always gives lower profit than us. And still they've asked double, triple our value. So that is what -- because basically, when people search for monopolies, this is what happens, right?

[Anush Kumar, Research Analyst]

Yes, sir. Sir, if I can squeeze in 2 more questions. The thing is, where are we heading towards in currency derivatives, sir? It looks like we're losing market share in the last 2 years, from 45-odd-percent in FY '19 to 25%. Is it down to the third-party trading software operability issue alone? Or is there anything because the competitor -- so volume has started well when compared to us. So where are we heading in Currency Derivatives segment?

[Ashish Kumar Manilal Chauhan]

It's -- basically, we've seen a decline in the trend since the COVID started basically. And what happened is majority of our participants are the nationalized banks who participate on a majorly basis on our exchange. And due to this COVID situation, there was a restriction for them. Some had to work from home, some were not there in the office. There was major trading disabilities for those banks. And that's the reason we saw some slump in the volume. But nevertheless, we are on track now, and we look forward for their increased participation.

[Anush Kumar, Research Analyst]

Yes. Sir, in one of your earlier con calls, you made a statement like Equity Derivative comes, then Equity Cash market segments automatically improves. With the growth in Equity Derivatives in the last quarter or probably the last 9 months, has it been able to translate it to the cash market segment?

[Ashish Kumar Manilal Chauhan]

It's early days. I would say it's still early days.

[Anush Kumar, Research Analyst]

So what -- where do we head, sir, in the -- any growth number which you can give for the year with respect to transaction?

[Ashish Kumar Manilal Chauhan]

Basically, we hope that, at some stage, this will be a kind of a virtuous cycle between the 2, right?

[Operator]

The next question is from the line of [ Pawan Nahar ], individual investor.

[Unknown Attendee]

Sir, I just wanted to ask you, after interoperability, I mean, is the best execution something that you see will be implemented by most brokers?

[Ashish Kumar Manilal Chauhan]

Actually, interoperability was announced 3 years back, and it was a hope and a belief that everyone implemented. Only on February 24, 2021, when one of the exchanges closed down, people realized that it was a safe belief. Actually, interoperability was there only on paper, not really implemented at various levels. And so that's where basically BSE also came to know and issued a circular saying you need to implement and so on and so forth. That's where now slowly the movement has started because people had not bothered to make the software, implement them and so on and so forth. So slowly, the movement has started.

[Unknown Attendee]

No. Sir, my question is interoperability, the way I understand it, right, versus best execution. Best execution, the way I'm looking at it, is just a button with face, that does get -- need the best volume/price combination from either exchange by placing only 1 button.

[Ashish Kumar Manilal Chauhan]

Interoperability is different from best execution. But what you are saying is correct, both are different, but that is doable. You can do best execution without interoperability, and then can do interoperability without best execution. And until now, both were not there. Now both will be there.

[Unknown Attendee]

So what is the update on implementation of best execution? For example, Zerodha, which is the biggest broker, has not done it yet.

[Ashish Kumar Manilal Chauhan]

I mean, I would not comment on a particular broker, but I think, broadly, most brokers are trying to implement it as of now.

[Unknown Attendee]

And last call or call before that, you mentioned 1 broker which has done it, which was BNP or Geojit, I don't remember. But like how many brokers have done it? And what is the -- like I'm sure you'd like to push for it, and what is preventing it from happening?

[Ashish Kumar Manilal Chauhan]

I have not mentioned in this part, but I had I think put it on some Twitter or something a few months back when 1 broker had showed it on the -- I mean, I got some video capture of that. And so it's basically telling other brokers that you can also do it. Somebody else has done it and so on and so forth. I mean, somewhere down the line, why, what stopped people is because it was not compulsion. I mean life goes on. There everyone has to have many, many other priorities. So this had to become a priority after the February 24, whatever happened. It has become priority.

[Unknown Attendee]

No, that was interoperability. I don't want to -- I'm not looking at interoperability. That is a separate thing. I'm only looking at best execution. And is it like compulsory SEBI mandate that it has to be done? If yes, any cause why it is not happening?

[Ashish Kumar Manilal Chauhan]

Interestingly, SEBI mandate is there from the day SEBI was actually given the powers from 1994. There are many regulations in India, which are not implemented, they are there on paper, right? So this was one of that. And now it is getting implemented.

[Unknown Attendee]

And I'm sorry, sir, I'm harping on this. But again, like -- you've been very vocal about interoperability, right? Would you be as vocal about best execution? Because to my understanding, it is very good for the investor who is buying and selling.

[Ashish Kumar Manilal Chauhan]

We are hugely vocal. You may not have heard, but sometimes people heard selectively. But we are hugely vocal. And we also issued a circular to common members who don't implement best price execution will also get penalized.

[Operator]

[Operator Instructions] The next question is from the line of Amit Chandra from HDFC Securities.

[Amit Chandra, IT Analyst]

Sir, my first question is on the equity derivative market share. So it's -- we have seen the early success where we have scaled the market share to around -- to around 6% to 7%. But if I see the market share has been concerned over the last 3 quarters, and it is hovering in the range of 6% to 7%. So what are we doing there to increase it further? Like if you can elaborate in terms of any new products on the pipeline or any new offerings that we have there so that we can scale that up.And second question is on the INX. So on the INX, we have seen that exchange doing like really well. So any view of when we'll start charging on INX? Because earlier, where we had sort of benchmarked that, if you do like 1 lakh trades per day, then maybe we can start thinking of charging. But now we are aware like above that in terms of the number of trades that we're doing on INX every day. So any color on that will be helpful, sir.

[Ashish Kumar Manilal Chauhan]

Yes. INX, there is not currently any visibility because the competition also doesn't charge there. And so we can't charge there yet. But let's see how far we go. One listing and all we have started charging. You know that we have 100% market share close to $50 billion of bonds have been listed now. And there is a potential of, even now, listing stocks and other things after depositors start there. So it's going to be an interesting play there in terms of the local, I mean, domestic market in BSE alone. We'll continue to push for new products, current products with better technology, better services. And hopefully, we will be able to get market share, which is better like what we are getting in commodities currently. Commodities -- options on goods has actually helped us establish that business. And we recently started the SUFI steel billet contracts. And so you see some innovations are already happening. We have some few other associations to start. Today also, I think, turmeric announcement was made. So you will see some interesting actions on some of this. At the same time, any instrument that is allowed in India has to go through the same process of consultative and other things and all, new interesting things like T+1 is coming. So whatever is allowed, we will be pretty much the thought leaders and implementation leaders going forward. At the same time, volumes are in the hands of many factors, and so we keep our fingers crossed.

[Amit Chandra, IT Analyst]

Okay. And sir, I'd like to note, on the pricing aspect, similarly on the kind of the commodity part, as you mentioned. So the competition has also announced that they are going to start charging for other options, like commodity options there. So are we also planning on similar lines? Or we are still going to operate for free? Because I think...

[Ashish Kumar Manilal Chauhan]

Yes. Currently, we don't plan to charge. We want a lot, basically, figure out in many more products because the competition, which you mentioned, is focused only on 2 commodities. We are focused on expanding the numbers and creating a real India-based market and where the delivery happens, right? So it's a bit of a different philosophical different strategy. But currently, we don't have the plans to start charging in options market for goods.

[Amit Chandra, IT Analyst]

So because the exchange charges anyway is not a very significant part of the total trading cost, right? So why we are planning to because not charging for the transaction doesn't help us to boost our volumes significantly. So why we are sacrificing on that if you can get that revenue?

[Ashish Kumar Manilal Chauhan]

But you are yourself contradicting yourself, Amit. You are saying that it's so insignificant, it doesn't matter. So why bother?

[Amit Chandra, IT Analyst]

No, sir, anyways, we are losing on revenues there, so we can get...

[Ashish Kumar Manilal Chauhan]

If that revenue -- so to see -- if they were having that revenue, why is it that their revenue is probably 50%, 60% lower than ours on total, right? It's a little bit insignificant for them, it is even worse than -- less than that for us, right? If that attracts more people to come on us, why not.

[Amit Chandra, IT Analyst]

Okay. Okay, sir. Fine. And sir, on the stake sale that was a part of a regulatory exercise, wherein we have to bring down our stake to 15%. So is there any -- is there any time line to that? Or we still have...

[Nayan Chandrakant Mehta, Chief Financial Officer]

October 23, previously. October 23.

[Ashish Kumar Manilal Chauhan]

[Foreign Language] It's October 23 is the last day.

[Amit Chandra, IT Analyst]

Okay. By October 23, we have to bring it down to 15%, right?

[Ashish Kumar Manilal Chauhan]

As of now, that is the regulation. Of course, you have seen also as much newspaper as I have seen about some change in thinking process and all.

[Nayan Chandrakant Mehta, Chief Financial Officer]

So let's see.

[Operator]

As there are no further questions from the participants, I now hand the conference over to Mr. Yogesh Joshi for closing comments.

[Yogesh Joshi, Head of Investor Relations]

Thank you all for attending BSE investor call. Take care.

[Ashish Kumar Manilal Chauhan]

Thank you.

[Nayan Chandrakant Mehta, Chief Financial Officer]

Thank you, all.

[Ashish Kumar Manilal Chauhan]

Good night.

[Operator]

Thank you. Ladies and gentlemen, on behalf of BSE Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.