Goldman Sachs predicts bright future for BSE as SEBI reshapes index options market

IANS April 1, 2025 236 views

Goldman Sachs has upgraded its outlook for BSE following SEBI’s proposal to limit index options expiry days. The brokerage notes BSE’s market share in index options has already grown from 16% to 22% this year. While maintaining a neutral rating, Goldman raised BSE’s EPS projections by 14% through 2028. The final impact hinges on how well BSE leverages these regulatory changes.

"“The final impact will depend on how effectively BSE capitalises on these changes in the coming months” – Goldman Sachs
Goldman Sachs predicts bright future for BSE as SEBI reshapes index options market
Mumbai, April 1: Goldman Sachs has projected a positive outlook for BSE Limited, following a recent proposal by the Securities and Exchange Board of India (SEBI) to restrict index options expiry days to Tuesdays and Thursdays.

Key Points

1

SEBI’s proposed Tuesday/Thursday expiry days may strengthen BSE’s position

2

BSE’s index options share rose from 16% to 22% YTD

3

Goldman hikes BSE EPS estimates by 14%

4

Neutral rating kept due to options trading penetration limits

This regulatory change is expected to benefit BSE by strengthening its market position and reducing concentration risk in the segment.

SEBI published its consultation paper on March 27, outlining plans to space out expiry days for index options.

The move aims to improve product differentiation and limit market concentration, which could work in BSE’s favour.

According to Goldman Sachs analysts, the proposal comes at a crucial time for BSE.

“Previously, the exchange had faced challenges due to SEBI’s limits on options open interest, which had impacted its market share,” the brokerage noted.

It added that however, with the new regulatory framework, BSE is now expected to see a rise in its index options market share.

Data shows that BSE's index options premium market share has grown significantly, rising from 16 per cent in December 2024 to 21 per cent year-to-date (YTD).

March 2025 has tracked even higher, with an estimated market share of 22 per cent. Encouraged by this growth, Goldman Sachs has increased its fiscal 2026-2028 Average Daily Premium estimate by 44 per cent.

The firm's projections for BSE’s earnings per share (EPS) have also gone up by an average of 14 per cent, with an expected 21 per cent EPS Compound Annual Growth Rate (CAGR) for the period between fiscal years 2025 and 2028.

However, Goldman Sachs has maintained a 'neutral' rating on BSE stock. The brokerage remains cautious due to relatively lower industry-wide penetration of options trading, which could limit overall growth potential.

If SEBI’s proposal is implemented, it is likely to solidify BSE's market position, allowing the exchange to benefit from regulatory efforts aimed at improving market stability and differentiation.

“The final impact will depend on how effectively BSE capitalises on these changes in the coming months,” the brokerage firm stated.

Tags:
BSE SEBI Goldman Sachs index options stock market derivatives trading
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