Options are roaring ahead; or are they?
₹75,667 trillion from ₹37,345 trillion in FY23, premium turnover grew at a more sedate 22% to ₹134 trillion, data from NSE showed. This is the slowest since FY18, when premium turnover grew 31.42% from the preceding fiscal year to ₹4.6 trillion. Analysts expect turnover growth to remain under pressure in the coming months.
Notional turnover is the total value of the option, while premium turnover is its market value—price to buy or sell an options contract. Since Nifty and Bank Nifty values rose in FY24, notional turnover has swelled, as it is a product of the underlying Nifty value and its contract size. Premium turnover refers to the price of the option multiplied by its contract size.
To put it in context, FY24’s index options’ premium turnover of ₹134 trillion was just 0.18% of notional turnover of ₹75,667 trillion. For NSE, exchange transaction revenue of ₹2,796 crore accounted for 71.8% of its total revenue of ₹3,892 crore in the December quarter, an IIFL Securities report said. While transaction revenue rose 18% year-on-year, it fell 7% quarter-on-quarter.
The board of NSE on 11 March approved a 1% reduction in transaction fees across cash and derivatives segments, effective 1 April, 2024. Apart from addressing growing competition from BSE, the cut could address the growth slowdown in premium turnover, a market participant said on condition of anonymity. Since re-introduction of Sensex options in May 2023, derivatives volumes on BSE jumped 22-fold year-on-year to touch ₹7,533 trillion in the current fiscal year.
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