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BSE Ltd
Earnings Call Analysis
Q2-2024 Analysis
BSE Ltd
BSE has reached a significant monetization milestone ahead of schedule by introducing a slab-wise transaction structure for Sensex options. This is to cover costs and drive growth in index derivatives, specifically for Bankex contracts. A record high quarterly revenue of INR 367 crore, up 53% year-over-year, displays impressive growth. Operational revenue saw a 59% surge to INR 314.5 crores, and profits for shareholders soared by 256% to INR 120.5 crores.
The capacity to process trades has expanded significantly, laying the groundwork for support in derivatives and other segments. Investment in technology infrastructure and colocation facilities at the primary site in Mumbai emphasizes a strategic commitment to future growth.
BSE's mutual fund platform, StAR MF, grew by 63% with 9.6 crore transactions, retaining an 89% market share among exchange distributed platforms. The consistent high transaction volumes, including a record 3.52 crore transactions in a single month, indicate a strong focus on scalability and functionality to support continued growth.
BSE is focused on diversifying; it infuses capital in promising areas, like exchanges in GIFT City and invests in subsidiaries poised for success. With these financial commitments, BSE is clearly invested in fostering both current and future avenues of growth.
Despite cost pressures, BSE concludes a strong quarter. Future investments in product profiles and infrastructure are aimed at securing long-term growth for shareholders, consistent with the 'Vibrant BSE 2025' mission.
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Ladies and gentlemen, good day, and welcome to BSE Limited Q2 FY '24 Investors Call.
This conference call may contain certain forward-looking statements about the company which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Anand Sethuraman, Head, Investor Relations. Thank you, and over to you, sir.
Good evening, everyone, and thank you so much, Yusuf. This is Anand from the Investor Relations team at BSE, and welcome everyone to discuss Q2 FY '24 results. Joining us on this call is BSE leadership team consisting of Mr. Sundararaman Ramamurthy, Managing Director and CEO; Mr. Deepak Goel, Chief Financial Officer; Mr. Sameer Patil, Chief Business Officer; Ms. Kamala K, Chief Regulatory Officer; Mr. Girish Joshi, Chief Operating and Listing Sales; Mr. Subhash Kelkar, Chief Information Officer; and Mr. Khushro Bulsara, Chief Risk Officer. Also present here are members of our Finance and Investor Relations team.
Do note that this conference is being recorded. The transcript of this call along with the earnings release and presentation can be found the Investor Relations section of the BSE India website.
Before we get started, I once again remind you that our remarks today will include forward-looking statements. Any actual results may differ materially from those contemplated by these forward-looking statements. And any forward-looking statements that we make today are based on assumptions and BSE assumes no obligation to update these statements as a result of new information or future events.
With this, I now request Mr. Sundararaman Ramamurthy, Managing Director and CEO, to give a brief overview of our company's financial and business performance of Q2 FY '23, '24.
Thanks, Anand. Good evening, everybody, and thanks a lot for joining the call. Happy Diwali. It gives me a great pleasure, as always, to address you all today. As I mentioned in my previous earnings call, the journey we have embarked upon has been nothing short of transformative, and I'm immensely proud to stand before you today to share our collective achievements and the roadmap ahead.
Let me start with our efforts to revitalize the BSE Equity Derivatives segment. As you may recall, based on member feedback, we had announced the relaunch of Sensex and Bankex derivative contracts with lower lot size and a different expiry on Friday from May 15, 2023. I believe that building a full-fledged derivatives business is a multiyear journey. I'm proud to say that we have made considerable progress to start with, with Sensex options. We are 5 months in now, and I'm very happy with the trajectory. There are just about 1 million active users at this point, and we are now getting to the point where we are going to be focusing on growing this segment further in terms of user base and premium profile. From what we can see, currently, market participants have made it their preferred product to trade on Fridays.
I'm also happy to inform you that we have crossed a significant milestone of having traded more than 27 crore contracts, representing a notional turnover of INR 177 lakh crores today, an all-time high. Our trading systems also process closed to 140 crore orders and 6 crore trades. It's higher than our equity cash segment. So far, more than 350 members have traded BSE derivatives, representing more than 10 lakhs UTCs since the relaunch. For Sensex, currently, our focus is improving the volumes on long expiry days and longer-dated contracts. And of course, we believe there should be a far more client -- there should be far more clients who will trade. I think that if we keep at this for a few more years, then we have a good chance of achieving our vision there.
On similar lines, we have reintroduced Bankex derivatives with Monday expiry with effect from October 16, 2023. Though it is still early days, the contract has generated significant interest, faster than what we have seen for Sensex. In just its fourth Monday expiry earlier this week, more than 1.35 crore contracts were traded, representing a notional turnover of about INR 10 lakh crores, [ 205 ] members and 42,574 UCCs participated on that day. For Sensex contracts, the strategy had earlier taken about 8 to 12 weeks. In a previous earnings call, I had mentioned that I was confident that appropriate monetization at the appropriate time will follow as we move towards achieving critical mass in terms of participation, volumes and liquidity.
I'm happy to update that we also reached a monetization milestone in respect of Sensex earlier than originally expected. With effect from November 1, 2023, BSE has introduced a slab-wise transaction structure for the current unique Sensex options contract, primarily to cover our clearing and settlement costs the exchange was barring as well as the initiative that is needed for the growth of Bankex contracts. Beyond index derivatives contracts, I also want to share some thoughts on our longer-term efforts to upgrade our technology infrastructure and colocation facilities to drive the momentum for the continued growth of index derivatives. We now have the ability to process 800 crores-plus orders across segments, up from 110 crore orders about 6 months back.
In terms of trades, we have upgraded our capacity to handle 18 crore trades from 2.25 crore trades about 6 months back. Our focus is expanding this capacity even further in order to support the growth of our derivatives and other segments. Similarly, we are working to increase the colo facilities and the [ light ] infrastructure in our primary site that is the PJ Towers in Fort, Mumbai. This will be a major focus area and an important part of our strategy and capital investment going forward.
Let me now start with the financial updates. I'm happy to inform that BSE has marked a historic achievement again in its highest quarterly revenue ever at INR 367 crores for Q2 FY '24 as compared to INR 239.80 crores in Q2 FY '23, a growth of 53%. Similarly, BSE's operational revenue had grown by 59% to INR 314.5 crores from INR 197.7 crores. The net profit attributable to shareholders of the company, at INR 120.5 crores, from INR 33.8 crores in the corresponding quarter previous year, which is a growth of 256%.
I will now share some of the key financial numbers, on a consolidated basis, for the quarter ended September 30, 2023, as compared to the corresponding quarter previous year. Revenues from transaction charges increased by 54% to INR 98.6 crores, aided by growth in equity cash and mutual fund segment. The clearing and settlement operational revenues increased by 98% to INR 33.5 crores. Treasury income from clearing and settlement funds have increased by 151% to INR 57.3 crores. Listing-related income increased by 29% to INR 86.7 crores, mainly due to contributions from book building income and annual listing income.
Other operating revenue, which includes data dissemination fees, trading income and software income has increased by 37% to INR 25 crores. Investment income increased to INR 47.5 crores from INR 36.6 crores. The operating EBITDA for Q2 FY '24 stands at INR 141.7 crores, up from INR 13.4 crores and operating EBITDA margin increased to 45% as against 7% in the corresponding quarter last year. Similarly, the net profit margin improved to 32% from 12%.
I also would like to update that the company bought back 86,532 fully paid up equity shares of face value of INR 2 each through tender offer route on a proportionate basis at INR 1,080 per equity share.
On the business side, let me start by covering our primary market segment. BSE platforms continue to remain the preferred choice by Indian companies to raise capital. BSE platform has enabled issuers to raise INR 3.46 lakh crores by means of equity and debt raising bonds, commercial papers, municipal bonds, et cetera.
Moving to our trading segment. For the quarter ended September 30, 2023, the average daily turnover in equity cash segment stands at INR 5,922 crores compared to INR 4,740 crores in the corresponding quarter last year. Like I mentioned earlier, BSE equity derivatives volumes have picked up, with average daily turnover growing to INR 32.82 lakh crores in terms of notional turnover as of October 2023. The average daily turnover in currency futures stand at INR 10,762 crores, as compared to INR 18,490 crores, the corresponding quarter last year.
Okay. Now let's get into our mutual fund Distribution segment. It continues to do well. BSE StAR MF delivered yet another quarter of record revenues and performance, up 56% year-on-year to reach INR 29.35 crores. The total number of transactions processed by BSE StAR MF grew by 63% to reach 9.6 crore transactions in Q2 FY '24 from 5.9 crores in the corresponding quarter last year. BSE's market share stands at 89% among exchange distributed platforms. BSE StAR MF has been consistently reaching new highs in terms of transactions in the platform for processing a new high of 3.52 crore transactions in October 2023. On an average, the platform processed 3.06 crore transactions per month in current financial year as compared to 2.2 crores in previous financial year. We are going to continue focusing on StAR MF and into which in terms of scalability, functionality and order processes. The BSE growth directly or via subsidiaries also have its presence in other related business, including India International Exchange; BSE Exchange at GIFT City; BSE Ebix, insurance distribution platform with Ebix Inc.; the Hindustan Power Exchange, HPX, in association with PTC India and ICICI Bank; BSE E-Agricultural Markets, BEAM, spot platform for trading in commodities; and BSE Administration and Services Limited, BASL.
I'm happy to update that the Board of Directors of BSE, in the meeting held today, have approved the fund infusion of INR 22.36 crores in India International Exchange, IFSC Limited, that is India INX, and INR 33.88 crores in India International Exchange Limited, India ICC, towards purchase of equity shares through subscription of rights issue, which is a reflection of commitment to GIFT City. Earlier on, October 18, 2023, the Board of Directors of BSE had also considered and approved the investment of an amount up to INR 30 crores in BSE Investments Limited, a wholly owned subsidiary of BSE, which will be deployed in potentially successful opportunities. BSE is on these new areas and is constantly working with partners for the growth of these businesses. Actually, and moving forward, we see that there is a significant opportunity to continue to expand and evolve these businesses.
In closing, this was another solid quarter for our business despite facing some headwinds in terms of expenses. We believe the investments that we are planning to make -- to scale up our product profile, scaling up our technology infrastructure will enable us to pursue long-term growth for our shareholders and deliver on our mission of Vibrant BSE 2025. Happy Diwali once again.
With these updates, I now hand over the call back to Anand.
Thank you so, so much for these updates. I can -- I request, Yusuf, please open the question and answers.
[Operator Instructions] First question is from the line of Devesh Agarwal from IIFL Securities.
Congratulations on a very good set of numbers. My first question is, sir, on this clearing and settlement treasury income, we are seeing almost a 160% Q-o-Q jump to INR 57 crores. Is this on account of higher margin money that we had probably in the quarter and next year? How much is our current margin money? And what has been the increase on the sequential business?
First of all, thanks, Devesh for this question. As you know, clearing and settlement charges is a function of the fee levied on the clearing and settlement services that we provide and also the margin money that comes from. Exact number of margin money I wouldn't have in my hand immediately to reply to you because it pertains to a subsidiary company, which is ICCL. But what certainly, I'll be able to reply you is, yes, the clearing and settlement charges have -- the revenue coming from clearing and settlement charges have gone up significantly. It is arising out of the increased margin money, as you rightly pointed out and the increased clearing and settlement services that are being offered by the clearing company to the clearing members.
But sir, on consol numbers, what we will be seeing the revenues would be net received from LSE, right, in terms of clearing and settlement and not on our own transactions.
Yes, Devesh, you are right. At consolidated level, we will see clearing and settlement expenses, which are payable to or paid to MSC in the top what we have given to our group company. So that will not...
Yes. I'm asking on the income side. I'm talking about the treasury income on clearing and settlement, which has been reported as INR 57.3 crores in the quarter, which is up 158% Q-o-Q on the income side.
So what is your question?
What has led to this increase?
That part of it, as I explained to you that, that increase is coming from ICCL. This is our subsidiary company. The clearing and settlement charges as a function of the clearing and settlement services offered by ICCL to the clearing members, as and when that increases, the charges also increase. Also, it's a function of the margins that are maintained. Then we talk about increase in the clearing and settlement services, that's a function of the volume of trades that pass through them and get settled. And since there's an increased activity, there's an increased clearing and settlement and therefore, the higher revenue.
All right, sir. Moving to the options segment in equity derivatives, we reported a revenue of INR 4.8 crore this quarter. As against this, what was the cost that we have incurred?
The cost that we have incurred is much higher than that revenue there. As you recall, we inherited the charges of INR 500 per crore of premium for the -- sorry, the option contract traded from the previous way in which it was implemented. Since we were changing, we did not touch the charges at that time. And we also made a commitment to the stakeholders at an appropriate time and appropriate level of charges will be levied, which has been done only from November 2 -- November 1, 2023. So the period, which is covered here, the charges that were received were at the rate of INR 500 per crore of premium. As against that, I think for the month of September, we would have paid around INR 17 crores to the regulator -- to the clearing corporation. So the charges were much higher than what we received as income. Most of this has gone to NCL since a good amount of clearing in respect of derivatives for all the members in the country happen through NCL.
Right, sir. And post the increase in the charges, now are we making any net contribution at the gross level after paying charges to the NCL?
Devesh, you need to give us some time for them because the charges got implemented on November 1, right? And we are just now, November 10. And it is not all these days were working days. There were 2 Saturdays, Sundays, I guess, in the -- or 1 Saturday, Sunday, at least, in between. So give us some time. Maybe next quarter, things will be very clear as to how the income profile is emerging, how the cost profile is emerging. One point, what we should notice, we receive revenue in terms of premium earned in crores, whereas we pay charges in a very complex fashion, which has multiple components, including number of contracts traded, premium, et cetera. So it's not a one-to-one comparison. So I will not be able to give you a number now. Since it is too early, we need to wait for some time, maybe the next quarter investor call, there will be clarity on how much we are making as much.
Right, sir. And one last question on Bankex. We continue to charge INR 500 as a tariff at this point in time. Any thoughts around what volume would we be increasing the tariff on the Bankex system.
Yes, it's a very valid question that you are asking. As we stated in respect of Sensex, we need to levy charges at an appropriate time, at an appropriate level. At the time, the question that was asked was, what is an appropriate time? We mentioned that we need to have a comfort that the volumes that we are seeing are sustainable. So when we said that the volumes probably in respect of Sensex is sustainable, we levied the charge much earlier than even what we anticipated. The same thing will be done in respect of Bankex as well. The charges will be levied at an appropriate level and an appropriate time when we feel the product has become sustainable and the market will be able to absorb the charges that we levy. The answer is, yes, we will levy.
[Operator Instructions] Next question is from the line of Prayesh Jain from Motilal Oswal.
Congratulations on a very good set of numbers. Just explaining the point what Devesh was mentioning on the clearing and settlement cost. If the volumes increase from here on by, say, 20%, would the cost go down? Or how should we think about this number from a growth perspective as the, incrementally, cost per crore will go down? Or will it be maintained? How should we think about this?
No, it's a very fair question. As I said, it is too early to give you a very clear picture. What I can do is trying to give you what the paradigm is. So that now this will be clear next quarter when we are answering it, it will be clearer. As I told, the cost paradigm in respect of clearing of options through NCL, it's a combination of multiple factors, including the number of contracts traded and the premium amount earned out of those contracts that are traded.
When we talk about premium and contracts, the premium has a relationship with us, whether it is in the money, at the money or out of the money. That is one thing which impacts the value of premium, and therefore, impacts of revenue. Whereas in terms of number of contracts, still it will be one, right? So the other thing is whether it is near the expiry or before the expiry, whether it is near next week, third week, monthly. So it's a combination of, therefore, a complex set of factors.
Typically, what I have seen in my experience is as a product mature, more from a simple out-of-the-money trading, more and more contracts converts to us in-the-money and at-the-money trading as well. And also simply from trading the current week, it goes and extends to the next week or next to next week as well. So therefore, what happens is, once the quality of the trading in terms of number of weeks cover changes, the premium changes, then the [ bar code ] cost that you incur in terms of clearing and settlement will change, and we will be able to study a better impact probably in the coming quarter because by the time we trade, Sensex would have graduated just not this week and time next week, even beyond that. And also this volume stabilization would have happened and the charges and therefore, the cost that we take would have stabilized, and we'll be able to throw more light on this with accuracy.
Just reiterating what you mentioned, is it fair to assume that if the volumes move closer to at the premium -- at-the-money contracts and longer-dated contracts, the cost per crore will go down?
Absolutely, perfect to understand and achieve this.
Perfect. And secondly, from a -- you mentioned that large -- almost every part of the volumes get traded through NFC clearing corporation. Is there any way that can change from your side or any input from your side that can change and you don't have to incur these costs in a large manner?
See, whether it is NCL or ICCL over clearing. Since they are a separate entity, BSE has to pay the clearing and settlement charges. The one argument you can have is if you pay to BSE's clearing corporation, it is in a consolidated account position, at least some amount will come back to your management. That's a bad argument to make. But that would depend upon the promotion of -- sales promotion capability of ICL and also the members preference in shifting to IPL from an established place where currently they are trading. While we are very clear and sure that the efforts will be on to help such of those members who want to shift from NCL to ICL. And also, our effort will be to acquire more new members who are joining the system by providing them better services into clearing corporation. But effort will be on, at the same time, we should be mindful of the fact whichever clearing corporation they clear, at this point of time, BSE has to pay a clearing fee in that clearing corporation.
Lastly, any thoughts on currency volumes which have been falling consistently and how do you plan to scale that up?
So that's a very fair question that you are asking. Currency volumes of late, I think the country in itself is seeing some amount of -- not a great growth. It is showing some sort of decline. It could be a combination of multiple factors. Our efforts are on to further and strengthen the currency options segment. And so therefore, the volumes can sustain itself and remain at a consistent level. While we will not be able to address macroeconomic factors, we'll be certainly able to address whatever we can in terms of more member inclusion, more participation, where the efforts are continuously on.
Next question is from the line of Amit Chandra from HDFC Securities.
So my first question is on the options revenue and expenses. So just to simplify it, in this quarter, based on the old pricing, we have earned INR 5 crores of revenue. And based on the clearing and settlement expenses, excluding what we have done last quarter, this incremental cost now INR 15 crores on all clearing and settlement. So the INR 15 crores of cost, that is what we have paid to NCL, right? And -- so the revenue that we get on the consol P&L strategy service income on clearing and settlement fund, this is the clearing and settlement revenue like received from BSE stand-alone or from NSE. So I just want to clarify that.
I'm not sure whether I understand the question. My CFO can answer if he's understanding it.
So Amit, I'll try to explain it to the best of my ability and the way I have understood. Both are -- I would say, both are not labeled revenue or income which we make on balances maintained with ICCL in terms of margin. It's different from what we pay for a clearing and settlement or option which happens on BSE platform.
Okay. So the clearing expenses of INR 15 crores is paid to NCL, right? So this is a correct assumption?
That's right. That is the right assumption.
Okay. And sir, if you can throw some light on how the clearing and settlement charges as you mentioned that it does not depend on the value, that is depending on the number of trades, but mostly if you're a member of one clearing corporation, then you can pay either NSE and BSE. And like most of the participants on the derivatives segment, the members of NCL. So most of the clearing is happening on NCL. So how come we are receiving revenue from -- our share of revenue from the increase in derivative contracts must be very low because if I'm not wrong, we have a 10% kind of a market share in terms of the clearing corporation in terms of the settlement of trades. So how do we address that? And secondly, on the pricing hike that we have done, so I know that we have increased pricing around 5x, but seeing our pricing in all other segments where we are almost similar to NSE or at a premium to NSE. So is it fair to assume that we can have a similar pricing versus NSE? And lastly on the volume that is happening...
Amit, may I interrupt you?
Yes.
See, if you ask 5 questions bundled as one question, I may miss answering some of them. That you should accept, and apologies from our side, because you are asking multiple questions in a single go. And if you put it all of them as a single question, it should not so happen, I'll miss answering any one of them. If I miss any one of them, my apologies.
Okay, sir, no problem. So you can answer the questions.
Okay. I only remember clearly the first 2 questions. So let me explain to you how the clearing and settlement charges work. So what has been put in place is there is an interoperability agreement between the 2 clearing corporations. In the interoperability agreement, there are 2 basic paradigms that have been defined in respect of derivatives. One is based on the number of contracts cleared. When he talks about the number of contracts cleared, that again, it's not a simple arithmetic. There are slabs. Based on the slabs, the per contract cleared, what will be the charge, becomes different. So that is one first paradigm.
The next paradigm that is put in place there is the premium amount collected. On the premium amount collected, again, there are slabs, and based on the slab, differential pricing has stipulated. So this makes it basically to start with the 2 factors, and each factor having multiple slabs. And then it talks about whichever is higher. So in the process, what happens, it becomes a complex number to compute, while in respect of the revenue that we own, it is very simple in the sense that it is based simply on whatever premium that we receive. And on that premium, there is a slab and then the slab you extrapolate and you get the revenue. So because of that, it is very difficult to equate one with the other. I hope I had explained the first question. If I lose anything, please do let me know.
No sir, it's clear. On the pricing part?
What was the question on the pricing part?
We have taken...
I remember, you asked me whether we will be raising it to the NSE levels, right? That was the question, isn't it?
Yes.
Yes. So see, as I told, we started with derivatives. Derivatives were not been there with BSE for around 23 years because in 2000 then this got introduced. So when we introduced now in 2023, there was a charge of INR 500 per crore, which was there. We just continued because we were not concentrating on that. We were concentrating on how to find a product which will be useful for the market.
The moment we got a feeling that it is right time now that we have brought a product which is useful to the market, therefore, the market will be able to absorb some amount of charges. So we, after consulting the market participants and in close collaboration and discussions with them as to what impact it will have on the trade, what type of impact it will have on the bigger spread if we put the charges? What will not come in the way of further product development? Because still it is in nascent stages, isn't it? We just introduced it May 15, and we are -- what can I say, we are just 6 months around. So in 6 months, the product has not reached its full maturity cycle. So at this point of time, whatever it can take, that's what we have put in place.
At some point of time, if we see that the market is mature enough to take a higher charge, that could be considered, that's point number one. Or some other point of time, let's assume, clearing corporation decide to unbundle the charges and not put the onus of connecting the clearing charges on the clearing on the exchange. But let's assume the paradigm evolves they are going to collect it from the clearing members themselves, then entire cost paradigm in itself undergoes a change, then we will have to revisit whatever charges we are making.
Our effort will be to charge that much, which helps in taking care of the interest of the stakeholders and at the same time, maintain a balance that it will not come in the way of growth of that product. Is it very easy? No. It's a very fine thin balance. How do we arrive at it? You arrive at it based on trial and error, and error should not be there because it can be a trial, it should not be ever an error because otherwise you would have killed the product. And therefore, by way of a lot of consulting process with the members and doing your own simulations to see that it can be taken. That's what we will do and that's what we will continue to do.
Next question is from the line of [ Pranav Thakkar ], who is an investor.
Congratulations for a great result. I'm a proud shareholder and this Diwali couldn't have been better with such a great result. And I would also like to thank you for accepting my recommendation to shift the Bankex expiry on Monday. And sir, I also mentioned that I'm a trader, and I have a couple of investments. First is that being an option seller, I normally -- I'm sensible on options and also options pie chart. So when I visit any of this website, I don't find the relevant data or strategies which are available for NIFTY. So basically, what I'm trying to say that if the strategies or the relevant data are available, same as NIFTY, or Bank NIFTY, in that case, we would be able to affect more option sellers. So are we doing some efforts in that direction, if you can advise that?
First of all, [ Pranav ], thanks for your suggestion for shifting of bank NIFTY -- Bankex. As you should have observed, we are always listening to people. And whenever we get good feedback from people like you and from our members, we always analyze it and wherever we can we implement it at the appropriate time. And thanks for being a shareholder of us, and we really value all our shareholders.
You were talking about whether sensible and some other means you said, whether they'll be displaying all the data in respect of Sensex and Bankex, which they typically display in respect of NIFTY or Bank NIFTY. As you are aware, they are not our platforms. So we do not have any say whatsoever on what they do. What we can assure you is anybody asking from us anything, it is -- which is possible for us to provide, we are always ready to help everybody in the market to come out with such type of information, which helps the investors to be intelligent and trade. At this point of time, I'm not sure whether there are any request pending from anybody to us where we have not provided what we could provide. If any of these people whom you mentioned were to approach us, we are more than happy to openly look into it and do whatever the best we can.
Right, sir. Sir, another thing is what I have observed many times. If I compare the margin of the BSE vis-a-vis the theta value, which is generating on the expiry date, on NIFTY, it is coming like 10 or 15 bps higher. So is it a possibility that we can reduce by margin to that extent so that whatever margin is blocked for trading Sensex or Bankex, if it is reduced by around 15%, in that case, I will be able to generate the same return as of NIFTY? I understand that volatility of Sensex is a little bit higher, but from a trader's point of view, I am feeling that margin is coming a little bit down, it will help to increase the volumes.
Thanks, [ Pranav ], for this suggestion. Two points here. One is, we will certainly look into your suggestion and see what best we can do. Second is having said that, margins are stipulated based on parameters stipulated by the regulators. So the parameters are applied by the exchanges. on the products, and whatever number comes out, what is charged as margin as you are rightly aware. So the leeway available with the exchanges for changing the margin parameters is nil. So -- and we don't levy anything other than what has been regulatory stipulated. So having said that, as I told before, we were looking to what you said, and if there are any merits in it, we can take it up with regulators.
Right, sir. And sir, if you can share on the website whatever premium is traded, we can get the notional value of contracts. But if you can add the premium value because on the website when you visit, you get total number of contracts traded and the value, but if premium value would be there, it will -- as a shareholder, it will give a little bit boost and we can get motivated.
I fully appreciate your suggestion. You will be happy to know that we are already working on it, and soon we will be introducing what the data that you are requiring in our website. We are working on it. It is in advanced stages of implementation.
Thank you, sir. And have a great year ahead.
Thank you so much.
Next question is from the line of Aejas Lakhani from Unifi Capital.
Congratulations on the numbers, and very Happy Diwali to all of you. Sir, my first question is you mentioned in your opening remarks about the active users today. Could you speak where we are in that journey? What is the possibility in terms of how many more active users or UCCs do you think we can reach out to? And then what duration of time do you endeavor to reach out to this universe? That's my first question, sir.
Yes, it's clear. Thanks. So today, the share the numbers, which more than what was shared in the talk initially I had. We have around 7 crore UCCs uploaded already into the equity derivatives of BSE, which is a very big number. What we see is around 1 million UCCs have already traded in BSE equity derivatives. The third important number is, at any given point of time on an expiry base, if you look at it, more than 3 lakh UCCs are regularly trading. So this is data.
If you ask where it could be? Of course, it is anybody's guess. What we feel is probably since there are 7 crore UCCs already in the system and 1 million have already traded, and since on a consistent basis around 3 lakh UCCs are trading, there should be a significant increase in this and that number should be substantially higher than what currently it is. As I said, it is in nascent stages. It will grow. Maybe it should grow at least to 10x compared to what it is now is our view, maybe, but some point of time, we will reach probably whatever numbers that are in the other exchange. I wouldn't know exactly what the number is. My presumption is it could be some 30 lakhs.
Got it, sir. And sir, from a market participation standpoint, the more larger advanced algo traders, where are we in the journey of onboarding them onto the platform?
It's a good question. So if you look at it, many of the large algo traders who are there today in the Indian market, they have already come in, and they have started participating with us. So we feel more and more active participation will happen from them as the product further grows in this stage.
Got it, sir. And sir, could you just speak about the colocation? How are you thinking about it? Because -- and could you just quantify, sir, that what is the space available to you today? And by when will the incremental racks come up? And how should we really construct our thought process?
Good point. Already, we have colocation facilities, if you may be aware. We have around 102 racks, which is there in our -- which is located in our primary data center, which is in So we have allocated them to our members who are aspiring to take them. And this is world-class colo facility and people are utilizing it already. As we grow the product, our understanding is there will be more and more requirement of colo racks, which we will be very happy to provide. We are working on it in finding out the space, which will suit the requirement within the building, the primary data center itself. And we are working to provide it ASAP so that when a member comes and asks for colo racks, we'll be able to provide that.
Got it, sir, any time lines on when you may incrementally provide this?
It will be a process. It will be going on ramp. So as and when we are requiring the -- when we get the requirement, we'll be going on increasing the capability and we'll be providing.
Next question is from the line of [ Rahul Kumar ], an investor.
Great set of numbers, sir. Sir, my question is, are you planning to introduce more derivatives on Tuesday or Wednesday expiry? I see derivatives on a quantitative basis.
So Rahul, I will split the question into two. The first question is, are you planning to introduce new products? The short and sweet answer is yes. Are you going to introduce products expiring on Tuesday and Wednesday and Thursday? Sorry, our answer is I don't know. Why I say I don't know? As we're coming out with new product ideas, and as always, I do, we'll be going to the members and asking them which day of expiry suits them. Whatever the members ask me to do, that's what I will do because it's not that I introduce a member's trade. It is me who will ask them what I should do, and whatever they ask me to introduce this product, and whatever is the time line and whatever expiry day, that's what I will do.
Okay, sir. My second question is we are not getting any value in equity futures. Are you planning to improve this?
I presume you're asking about individual stock future. As you would have seen, only on relaunching a product, we are able to get a traction where we concentrated the relaunch after talking to the brokers. We have not gone and talked to any of our members about stock products at this point of time. At an appropriate time, we will be talking about the appropriate stock that we need to introduce and we will do the need.
And sir, my last question is on equity cap. Our market share is hovering around 8%. In the last month, we see a significant jump. But in this month, we are seeing our market share is going down again. So any plans for this?
See, the market share of BSE has been a function of what is the total activity in the market. And based on that, there is a market share that is coming in. We have been working, as I always used to tell with all the institutional shareholders, institutional members like AMCs, LICs, insurance companies and all, requesting them to divert some amount of order flow into our exchange.
As you know, historically, in the last few years, the market share of BSE has come down to as low as 5%. We are striving hard to take it up. We are working with all of them. And we are also working with all the algo players, retail traders and all to provide a level playing field to BSE whereby there is a significant and good amount of order flow coming to our equities market so that BSE can become vibrant. We will continue our efforts to reach our goal.
We will take the last question from the line of Faizaan Joad from Singularity Holdings.
Congratulations on a great quarter. I just have one question on the option [Technical Difficulty] 5-odd months.
Sorry to interrupt, Mr. Faizaan. Your voice got a break in between, you can ask your question again.
Yes. So my question is just on the option volume market share. What is the market share of the derivatives volume does BSE aim to capture over the next 2, 3 years or even the next 12 months, given the traction we received in the last 5 months?
Faizaan, in the actual, but also in the lighter vein, my market share is 100% of what it is. Why do I say that? My product is not available anywhere else, right? Sensex is available only in India. So whatever I trade is my 100% market share. So that's in a lighter vein. But to answer your question in all sincerity, what you're talking about is, what is the growth percentage we are expecting in the market? That's how I interpret it. We are not looking at growing this product in terms of market share because as I said, no, you cannot compare apples with oranges. And mine is a complementary product, not a competing product. So it will not be fair on my part to talk about market share.
We are thinking about extending it at least to 400 to 450 members across the country, have at least 30 lakh UCCs trading on it on a regular basis, have an active current week, next week and next to next week and next month contract. This is -- these are the parameters by which we are measuring our success. We are not benchmarking our success in terms of what is happening in the market elsewhere. We are benchmarking our success in terms of whatever is the journey that we are stipulating for ourselves, and against which we are telling that where we have to go. That's the way we are looking at it.
Ladies and gentlemen, that was the last question for today. I now like to hand the conference over to Mr. Anand Sethuraman for the closing comments.
Thank you, Yusuf. And I thank all the participants for participating today. I wish you all a Happy Diwali. Thank you.
On behalf of BSE Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.