Thanks for the opportunity and congratulations on a good set of numbers. Just one question, we have seen the market share increase in the option derivative segment. What also we have seen is that the competition reducing lot sizes and they’ve also introduced same -day expiries in the GIF T city? So, are we going to follow the suit? Thank you, Mohit, for your kind words and congratulating us and for this question. BSE has always been following the principle of looking at the voice of customers and then going ahead and implementing changes. The questions which you have raised about whe ther we will be making any changes to the product suit as far as Indian weekly derivatives are concerned, we will be consulting the market and based on whatever the market feedback is, then subject to the large size rules stipulated by SEBI, we will be doing from time to time whatever changes are required. As far as 0-DTE in GIFT City is concerned, for us, we are working towards creating deeper liquidity in the existing weekly Sensex futures contract at GIFT City. So, at the right point of time, with the right support from market participants, we will consider bringing in more features and more products.

All right. This is helpful. Thanks and wish you all the best

Moderator

Thank you. Our next question comes from the line of Amit Chandra from HDFC Securities. Please go ahead.

Thank you for the opportunity and congratulations on a very strong set of numbers. My first question is, obviously, on the market share gain that we have seen and oppose the change in expiry. So, what is driving this? Because we have seen market share gains in almost all days from expiry (E) to expiry minus 4 (E-4). So, any number that you can give us in terms of what is driving this and what exactly can be the number. And also, we have seen the rise in the premium to notional was there till September, post that the rise in the notional has been higher. So, that has impacted our margins as well. So, your views on that and where we are in the journey of increasing the institutional participation or changing the mix in terms of the index options where we wanted to see a rise in terms of the monthly volumes. Thank you.

Thank you so much, Amitji, for this question. There are three questions packed into one question. So, in case I miss answering any one of them, you may have to remind me. If I recap the question, the first part is on the market share increase and related t o that is the institutional participation in options. And the second question was with regard to what is the notional rise vs the premium, that question was there. So, let me answer all the three of them. As far as the market share part of it, as you would recall, BSE stand has always been in a lighter vein, we always say that our market share is 100% because our product is unique. Notwithstanding that, we have never been tracking the market share part of it with regard to the derivative. Our intention and our work cont inues to be in deepening and broadening of markets. We have been taking multiple steps in including more number of participants, more number of members, and more FPIs. Our journey there continues. Whatever were the goals that we placed in front of us for the timelines, we are in line with our expectations and we are progressing. We are planning to add more institutional participants there. As you rightly pointed out in your third question, efforts are on for us to bring in more institutional participants who can help in building even more the growth trend that we are seeing with regard to the other than current week options, monthly options, etc., and also increase the liquidity in respect of index futures. At this point of time, it’s an ongoing effort for us and we are very confident while it is slow, it is steady, and therefore it is moving in a positive mode. With regard to the margins of premium versus notional, as you would appreciate, the receipt of premium by us, the revenue for us comes from the premium, whereas the regulatory charges are based on Notional turnover. The premium that is received is a function of multiple things, including volatility. The volatility behaviour is based on both internal and external events. As you would appreciate, the internal events in the first quarter made the volatility to show higher tones, while the events of the second quarter made the volatility subdued, making the premium realization per contract different from what it was for the first quarter and thus compressing the margins. These events, being uncontrollable and unpredictable, no future trend in this regard could be predicted by us.

Okay, sir. Thank you.

Moderator

Thank you. Our next question comes from the line of Bhavya Sanghvi from Alchemy Capital. Please go ahead.

Congratulations on a great performance. Sir, my question is on the change in voluntary contribution to the core SGF. So you said that 5% of the transaction revenue would be transferred to core SGF. One question was that, what is the target? Is it 150% of minimum requirement? Have I heard it right? Correct me if I am wrong. Thank you. Sanghvi ji, thank you so much for your congratulatory message. Yes, indeed, you heard it right. Leave alone the percentage, I will just explain the principles so that the percentages will become more sensible. As you know, it is very difficult to predict the behaviour of core SGF requirement as the parameters involved in the computation of SGF is more complex and it is not a simple direct relationship with any single factor. This, in the past as we have seen, has been leading to a lot of sudden spurts in the requirement of core SGF and therefore having sudden impact on the quarterly earnings. In order to smoothen it and as a matter of financial prudence, what we thought was some minimum amount on a quarterly basis out of our revenue should be contributed to the SGF. So, that is where the 5% comes in. And when we start contributing, if over a period of time we have over-contributed and the trend in SGF’s requirement has not kept in line with the simulated model what we have followed to predict a probable requirement, then we will be contributing SGF without any actual need. So, to put a cap, the 150% requirement has been put in place. If more than 150% of the requirement, if we have touched the 150% requirement, we wanted to halt this voluntary contribution til l such time when the amount contributed by us is actually consumed by the requirement and further fresh requirements remaining. Basically, in simple English, it is to ensure that no single quarter suddenly has jerks in the earning because of new emergence of additional requirement of core SGF to be contributed by BSE.

Understood, sir. Sir, just one follow -up on this since you have disclosed some data on clearing corporation of BSE. So, just wanted to update where we have reached on the decoupling of the charges, Clearing charges? Thank you. That is all from me

I am not sure whether I am understanding the question of decoupling of charges what you mean. If you mean that we should unbundle the charges, unbundling of charges at this point of time is under the regulatory ambit because the original charges that are being paid come under the regulatory ambit of the agreement between clearing corporation under the oversight of the regulators. So, unless and until that regulatory clarity emerges by way of the normally used co -creative consultative process, unilaterally, we will not be able to unbundle. So, once that happens, unbundling will happen.

Understood, sir. Thank you.

Moderator

Thank you. Our next question is from the line of Madhukar Ladha from Nuvama Wealth. Please go ahead

Congratulations on a great set of numbers. Just wanting to get a better understanding of the SGF contribution that we are going to do. So, this 5% of transaction charges, this is going to be BSE’s contribution, right, sir? ICCL’s contribution can be in addition to that. So, in our consolidated numbers, the actual sort of contribution to SGF can be larger than 5% of transaction charges. Is my understanding correct on this? Second, you mentioned 150% of, again, sort of the minimum requirement right now. So, I wanted to understand what is the current minimum requirement and how far are we from that 150% also to get a sense of, you know, where could we, I know that this is a moving goalpost. So, maybe a disclosure every quarter on this would also be helpful.

Ladha ji, first of all, thanks for congratulating us and thanks for your participation and question. Yes, you are right. What we are talking about 5% of transaction revenue is from the BSE side. Will ICCL be contributing on its own to the core SGF? Yes. ICCL’s revenue is not transaction revenue. So, we should not take ICCL contribution, add it to BSE’s contribution and put the denominator as transaction revenue and say the contribution is more than 5% of transaction revenue. ICCL, from its revenue, as shoul d be required, will be contributing for the core SGF. You are understanding that BSE, on its own, from its 5% of transaction revenue, contributing the core SGF is an absolute correct number. 150% is not any regulatory stipulation. As I said, this is for us to halt and look how much more we should go ahead and when we should stop. If on a regular basis, every quarter we start contributing, this is based on a simulated model that we thought this is what is required. If the core SGF requirement is not growing in line with what we projected, because the computation of core SGF and dependence of it is on multiple parameters, which are not unilaterally correlated, so the expectation and actual may be different. If it is different and if we are building it, at what point of time we should halt and not further contribute till the utilization actually happens. That is the 150% number.

Yes, I understood that. But I wanted to just know that what is the gap that we need to bridge as of now? And I just have a follow-up question on this.

Ladha ji, let me answer the first question. Otherwise, I will forget. There is no gap to bridge. We are contributing on our own. There is no shortage now. We are contributing. We will continue to contribute till we reach 150%.

So I meant what is the gap to 150% as of now?

Madhukar, we don’t disclose these numbers publicly. Like I said, it is an internal calculation, which we do on a monthly basis. So, if X is, say, the minimum corpus, we see up to 150% of that X, and accordingly we decide to contribute or not. These numbers are not publicly discussed on our website or on the website of our clearing corporation. So, this is purely from an internal perspective, which we will not be able to disclose it publicly.

Understood. Thanks, Anand.

Madhukar, we can take any other question offline. There are several other questions, people in the queue now..

Just one thing, if I may squeeze in. If you can clarify on what is ICCL’s policy also on SGF, if there is a policy as such? See, we will discuss ICCL’s policy separately in a call offline, because this call being BSE, since there are many other people waiting to ask for BSE -related questions, we should do it. And you have asked already four questions. Since it was only one question quota, we will take it offline and we will explain to you. Let us now give opportunity for the people who are waiting to ask on BSE performance, and then we will come to you. Is that okay?.

Yes, sir. Thank you, sir..

Moderator

Thank you. Our next question is from the line of Abhishek Kumar Leekha from Neste Wealth LLP. Please go ahead

Abhishek Kumar Leekha

Thank you for the opportunity. And congratulations to the team for a great set of numbers. I would like to get an understanding on the BSE EbiX model, the kind of star platform that we have capitalized upon. The same we have not been able to capitalize upon the BSE EbiX Insurance Platform. I would like to have understanding on that. How we can capitalize or probably how we can take our stakes up, which can ensure that we have substantial skin in the game?.

Leekha ji, thanks for asking, thanks for participation and thanks for your congratulatory message. Yes, indeed you are right. The StAR MF platform has seen a better success compared to the Eb iX. EbiX has not taken off and I think if we look at the entire country, the mutual fund performance levels are very different as compared to the insurance scheme’s performance levels. There are a host of factors. Some of them are controllable, some of them are no t controllable, some of them are macro in nature. The point that you made that there has to be an effort or there has to be a rethinking in respect of what would be the role for us as effectively as it could be, should be made. And we will be making such t hought process because it is the right time given the success of mutual fund, that’s not what we see as replicated in respect of Eb iX. Of course, the rules are different, the regulators are different, the needs are different. Nevertheless, we will be getting into a deep thought process to see what is that that can come out of EbiX and what should be the future course of action for us.

Yes, thank you. Because what I feel is like there is a great set of opportunity. It only needs a rethink and a reassess. And so we look forward to your steps in the future. Thank you so much.

Thank you, sir.

Moderator

Thank you. Our next question is from the line of Devesh Agarwal from IIFL Capital. Please go ahead.

Understood, sir. Thank you.

Thank you for the opportunity, sir. And congratulations on a great set of numbers. My first question is a clarification question. Could you again highlight how much is the co -location revenues that you have booked in Q2? And in which line item have you booked this.

See, all the racks that we have already generated, we have allocated. How much the members are using, what percentage utilization, we wouldn’t know. It will be the question of what we create and what is taken. We are expecting another 70 to 90 racks to come within the close of this financial year and which also will be allocated by us. Once it is done, we will have around 500 racks, which is a mix of both 6 KVA and 15 KVA racks. Since 15 KVA racks are 2.5 times the capacity of the 6 KVA racks, from a 6 KVA equivalent, roughly you can say it will be equivalent to some 650 to 700 racks. But the actual number of racks will be around 500.

Right, sir. And sir, one last one, your share in the clearing and settlement has kind of increased. So, could you share what was the external revenues that we have booked from clearing and settlement? And is this SGF contribution that we have started from this quarter onwards, is in lieu of this increasing share in the clearing and settlement?

So, let me take you a bit back. If you recall, when I joined BSE, the clearing capacity for BSE’s clearing corporation was just 50 trades per second per broker. Technologically, the clearing corporation was sound enough to take multiple members, particularly big members. We have been consistently working on it. By the start of this financial by April, it was around 3,000 trades per second per broker was the capacity that we had reached. From there, we went ahead with the system upgradation. We took it up to around 27,000 trades per second per broker per client, which if you benchmark, is much ahead of what one of the largest trading members in this country could be generating as trades per second for one person. So, clearly this has led to some of the major brokers considering ICCL as their clearing corporation and that shift has taken us to the higher market share. The clearing charges income of ICCL is around Rs. 32 crores this quarter and on an ongoing basis, we have to wait and watch because all these implementations and all these new members are happening one behind the other. The full impact of it will be realized in the coming quarters.

And the SGF part, sir, is it connected to this because with the higher clearing share, does the SGF requirement also goes up for us?

No, as I told you, SGF competition is a sort of a complex model. It is just not based on just the volumes cleared and the volumes traded. It is a complex set of things based on stress test requirements as stipulated by SEBI. So, there is no specific increase in SGF because of which we have started contributing. I would like to reiterate as a sort of financial prudence in order to ensure that there is no sudden surprises at the end of any quarter. We are planning it properly so that on a regular basis, voluntarily, BSE computes some amount and puts it into SGF so that any sudden spike in SGF requirement arising out of multiple factors would not adversely and suddenly and surprisingly impact the profit numbers.

Right, sir. Thank you so much and all the very best.

Moderator

Thank you. Our next question comes from the line of Antony Joseph, an individual investor. Please go ahead.

Sir, thanks for an excellent set of numbers again. My question is related to the capital expenditure that you have actually incurred in the last six months of about slightly over Rs. 300 crores. Would you be able to kind of give a breakdown of that?

Sir, I am not sure how these Rs. 300 crores numbers you are referring to. Any suggestion where you are getting it from, sir?

It is from your cash flow statement. If you look into your cash flow statement, it is clear that there is about Rs. 305 crores. If I am not wrong, I am not in front of my system right now but I have seen this number.

No problem. Let me look into it and reply. Just give me half a millisecond. I am having the cash flow in front of me. I am not able to see any specific Rs. 300 crore numbers, sir.

The first line on your investing activities. Okay, got it. You are talking about capital work in progress.

All put together, yes. The effective investments that you have made.

Got it. What we mean by this capital work in progress is as you would recall, the growth in BSE in the last three years has been significantly larger. To cope up with it, there was a significant requirement of investment in multiple areas, in physical infrastructure, in trading infrastructure and technology infrastructure. All this infrastructure put together is what we are showing here. It has multiple facets of investments, including what we are spending on building, co-location, technology, servers, DR, etc.

But the Rs. 300 crore number is just from the last six months, right? It is significant for a particular period.

Absolutely right.

It is the kind of expenditure that we have ever seen before. It is great. You are doing excellent in terms of your revenue, in terms of your profits. But considering this kind of number in terms of capital expenditure is significant for a six -month period, it would be great if you can give a breakup of what this is. If it is investment into a property, that is great. I am not questioning why you are doing it. I just want to understand where this is going?

I totally appreciate your point. Rs. 313 crores is not a small number. It is a big number. It is a mix of multiple things, including the physical and technology infrastructure. What we can do is right now in front of me, I don’t have the breakup. Offline, certainly we can take your call. You know the numbers to call or the mail to write. Please do write to us. We will give you all details because your point that Rs. 313 crores is not a small number is fully taken and we will be able to provide you a breakup of whatever we are doing.

Thank you, sir. Great going.

Thank you so much.

Moderator

Thank you. Our next question comes from the line of Arpit Shah from Stanley Asset Managers. Please go ahead.

I just wanted to understand the SGF contribution this quarter was about Rs. 11 crores. How should we think about this 5% number? When it will start? If I see your transaction revenue is about Rs. 794 crores and 5% of that would be a significantly higher number. How should we think about the 5% number? How should we calculate that number?

I am not sure whether you were there from the beginning of the call. If you are straight applying the 5% to the total revenue, this will not match with the Rs. 10 crore number because we started it from September only. That is why the number comes to 10%. The rational of 5% and 150% since I have already explained, I am not reiterating. Your mathematics is correct. If you apply on the topline, say 5%, it is not resulting in Rs. 10 crores. Why? We started it only from September.

Got it. So going ahead from every quarter till 150% is achieved? Correct, sir. Absolutely, correct. Right understanding.

Got it. Perfect. Thank you so much.

Thank you.

Moderator

Thank you. Ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to Mr. Anand Sethuraman for closing comments. Over to you, sir.

Thank you so much. I can see there are still a significant number of questions. I would request all of them to reach out to us at bse.ir@bseindia.com. Thank you all for participating today. Thank you.

Moderator

Thank you. On behalf of BSE Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.