Feb 16 (Reuters) - Shares of Indian bourse BSE led losses among bourse and brokerage stocks on Monday, dropping as much as 9.9%, after the country's central bank tightened norms for bank lending to stock brokers and other market intermediaries.
On Friday, the Reserve Bank of India issued revised norms regarding banks' lending to capital market participants, including higher collateral requirements for bank guarantees and a ban on lending for proprietary trading by brokers.
Proprietary trading, which involves using a company's own funds to trade, accounts for 50% of equity options premium turnover, according to Jefferies. Stricter collateral requirements for bank financing to such traders would raise costs.
Stock brokers Groww, Angel One and Motilal Oswal Financial Services fell as much as 4.8%, 9.5% and 3.3%, respectively.
The revised norms will take effect from April 1.
The new rules, in conjunction with the recently hiked transaction tax on equity futures and options, are expected to dampen derivative trading volumes. India's federal government and financial regulators have taken several steps to cool the derivative trading market, where retail investors have made losses.
Jefferies pegs BSE as the most affected by the new regulations on proprietary trading, which could result in a 10% earnings impact on the exchange operator.
Angel One would need to "immediately relook" its funding for the margin trading facility, JM Financial analysts said in a note, while Groww may need to raise funds from the market.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Rashmi Aich and Janane Venkatraman)
