BSE outperformed the National Stock Exchange in the second quarter with a 45 percent jump in net profit and a 34 percent increase in revenue, driven by strong growth in equities derivatives, although sequential performance was hindered by regulatory changes to trading sessions.

BSE outperformed the National Stock Exchange in the second quarter with a 45 percent jump in net profit and a 34 percent increase in revenue, driven by strong growth in equities derivatives, although sequential performance was hindered by regulatory changes to trading sessions.

BSE outperformed the National Stock Exchange in the second quarter with a 45 percent jump in net profit and a 34 percent increase in revenue, driven by strong growth in equities derivatives, although sequential performance was hindered by regulatory changes to trading sessions.

BSE has outperformed the National Stock Exchange (NSE) in the second quarter with its net profit and revenue growing much faster than its larger rival. Helped by increased activity in the equities derivatives segment, BSE's net profit jumped by 45 per cent to ₹809 crore year-on-year for the quarter ending September 30. Similarly, its revenue rose by an equally impressive 34 per cent to ₹1,432 crore in the second quarter.

The operator of the country's second-largest exchange beat analyst estimates of about ₹755 crore net profit. Its revenue for the quarter met most of the analyst estimates.

In comparison, NSE's net profit grew by 22.8 per cent year-on-year, and its revenue was up by 10.6 per cent. This was NSE's first quarterly results announcement since its IPO earlier this year.

While BSE's net profit growth was fueled by the launch of derivative products and increased participation from investors, the picture dramatically changes when its performance is seen sequentially, or quarter-on-quarter.  

After the market regulator Securities and Exchange Board of India (SEBI) introduced the new closing auction session in August, trading volumes were significantly hit. Though the average daily turnover in derivatives, calculated on the basis of premiums paid by traders to buy ​the contracts, rose ​50 per cent year-on-year, it dropped 24 per cent sequentially, a report from Reuters pointed out.

This impacted its sequential growth in profits and revenues, both of which fell quarter-on-quarter. The only silver lining could be that the drop was deeper in the case of NSE.

SEBI had introduced CAS to align local markets with global standards, but the new system led to volatility, with many traders complaining. That impacted the volumes. After the pushback from traders, the market regulator partially reversed the new system in October.

BSE has four lines of business: trading and clearing, services such as listing to corporates, distribution of mutual funds and other services such as co-location. The biggest of the four is the trading and clearing vertical, which generates revenue in the form of transaction charges. Due to the new CAS system, revenue from transaction charges saw a fall sequentially in the second quarter. It remains to be seen if SEBI's part reversal will help BSE recoup some of its growth in the third quarter.

Earlier in the day, BSE's stock fell by 2 per cent during trading hours to ₹3,580 per share. The company announced its results post market hours.

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