BSE, Angel One, MCX Shares Slide over RBI’s New MTF Norms: Here’s Why

Shares of online brokerages as well as stock exchanges dropped in early trade on Monday, reacting to a new regulation by the Reserve Bank of India last week. The RBI regulation allowed banks to directly fund acquisition deals and extend loans against market-linked instruments.

However, the central bank also mandated that bank loans extend only fully secured funding to capital market intermediaries (CMIs), marking a sharp tightening from earlier practices where guarantees could be backed by partially unsecured instruments.

In early trade, shares of BSE plunged as much as 10% to ₹2,726.30, while Angel One fell 6% and Multi Commodity Exchange of India dropped up to 7%. Groww also declined 4% as investors assessed the impact of sweeping new lending restrictions set to take effect from April 1.

By 2:43 pm, BSE shares had partially pared losses to trade at ₹2,813, down 7%, while MCX stood at ₹2,322.80, down 0.76%. Groww was trading 1.69% lower at ₹170, and Angel One was down 5.02% at ₹2,562.90.

Under the revised norms, credit facilities to brokers, including those for margin trading, must now be backed by 100% collateral, with at least 50% in cash for margin trading funding (MTF), while equity shares accepted as collateral will attract a 40% haircut for valuation.

What does it mean for brokerages?

JM Financial believes that “credit facilities with 100% (or higher) collateral will make the bank channel unsuitable for brokers, and they will only use it for short-term mismatches.”

The brokerage explains that Angel One had total borrowings of about ₹3,400 crore as of March 31, 2025, of which nearly ₹1,700 crore (50%) came from banks. With tighter bank funding norms, the company may now need to increasingly raise money from the market through commercial papers (CPs) and non-convertible debentures (NCDs).

Angel One has already been using CPs in recent years and had also raised around ₹50 crore via NCDs.

JM Financial expects Angel One to first tap NBFCs for funding (₹800 crore outstanding as of March 2025) and gradually expand NCD issuances, while continuing to rely on CPs (₹900 crore). While borrowing costs may not rise significantly, this could shut off a key funding channel for the company, especially as it has rapidly expanded its MTF book to ₹6,100 crore in recent years.

In contrast, Groww is largely equity-funded. However, despite strong profit growth of ₹550 crore in the December quarter and an IPO fundraise of ₹110 crore, the sharp 4x jump in its MTF book to ₹2,300 crore in Q3FY26 may push the company to tap market borrowings going forward, the brokerage noted.

Brokerage firm Jefferies estimates that the revised norms could shave off around 10% from the earnings of BSE, reported The Economic Times. It claimed that proprietary traders, already hit by the recent securities transaction tax (STT) hike, may grapple with rising costs due to stricter cash collateral requirements.

As per Jefferies, if nearly half of proprietary trading volumes (excluding HFTs) are impacted by the RBI rules, options turnover could decline by 10–12%, translating into a similar earnings impact for the exchange. However, BSE may be able to cushion some of this pressure through pricing revisions, given that its options charges remain about 7% lower than peers, the note added.

Additionally, the new rules mandate continuous collateral monitoring and margin calls, increasing operational complexity at a time when capital access is tightening. With the norms set to take effect from April 1, 2026, market participants have a narrow window to realign funding structures that have supported the rapid expansion of India’s retail trading ecosystem.