Did BSE really overtake NSE in F&O turnover? Here’s why the math may be misleading

Recent reports suggested that the BSE overtook the National Stock Exchange (NSE) in the derivatives segment for the first time in April, drawing significant attention from market participants. But a closer look at the underlying data indicates that the shift appears more technical than structural.

At first glance, BSE’s notional derivatives turnover jumped to about Rs 5,377 lakh crore in April, up nearly 26% month-on-month, while NSE’s turnover dropped to around Rs 4,338 lakh crore, a 21.6% decline. This created the impression that BSE had briefly taken the lead in India’s largest trading segment.

However, analysts say this comparison is misleading. The primary issue lies in how derivative activity is measured.

Notional turnover, which multiplies contract value by underlying index levels, can exaggerate volumes when index prices are higher. Analysts point out that such calculations can distort comparisons by as much as 19 percentage points, making one exchange appear larger even if actual trading activity is not proportionally higher.

Instead, premium turnover — the actual money paid for options contracts — is considered a more reliable measure and is widely used by regulators like Sebi and institutional investors. On this basis, NSE continues to dominate.

In April, NSE retained 86.8% share in overall F&O premium turnover and 62.9% share in index options, even in what was described as a “holiday-distorted” month.The distortion came from the structure of expiry days, which are critical drivers of derivatives volumes.NSE’s flagship Nifty contracts expire on Tuesdays. In April, two key weekly expiry sessions were lost due to holidays, directly hitting volumes on the exchange. In contrast, competing contracts with Thursday expiries for BSE were unaffected, temporarily boosting activity elsewhere.

Brokerage ICICI Securities highlighted a similar trend in its note. NSE’s options premium average daily turnover fell to Rs 64,500 crore in April, down more than 31% from March, largely due to fewer expiry days. In contrast, BSE’s premium turnover remained largely stable at Rs 33100 crore, showing only marginal growth.

The same pattern was visible in contract volumes. NSE’s average daily options contracts dropped to 142 million in April, down nearly 26% month-on-month, while BSE’s rose to 176 million, up about 20%.

Even then, combined system-wide activity actually declined. Total (NSE+BSE) options premium turnover fell to Rs 97600 crore in April, down 23% from March, suggesting the overall market cooled rather than shifted meaningfully between exchanges.

The broader takeaway is that while BSE has been steadily gaining traction — especially in options contracts — the April crossover in notional turnover does not reflect a structural change in market leadership.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)