Over the past year, the Bombay Stock Exchange (BSE) has experienced a remarkable reversal in its fortunes. After having a modest market share of 0.1% in the futures and options (F&O) market, it has now surged to 7.4%.

Industry experts anticipate that this positive trend will likely continue, albeit at a slower pace. Consequently, the dominant player in this segment, the National Stock Exchange (NSE), has begun adjusting its strategies to counter this unexpected competition. An unnamed NSE official stated, "We are not directly competing with BSE. They were quite aggressive last year. We aim to reclaim some lost market share this year through new initiatives."

BSE's rapid rise in F&O market share, particularly in terms of contract premium value, occurred within just nine months. Additionally, the average daily turnover of BSE in the options premium segment surged over 80% sequentially in January-March, compared to a 36% growth for NSE during the same period. This trend has been consistent throughout the year. So, what factors contributed to this sudden shift in fortunes? Experts point to BSE's decision to change the expiry for the Sensex F&O contract from Thursdays to Fridays as a key factor. This move gave BSE a significant advantage in market share on Fridays since NSE does not have any major F&O contract expiry on that day. Following the success of the Sensex, BSE also shifted the Bankex's expiry to Mondays from Thursdays.

The transformation of BSE's fortunes began when Sundararaman Ramamurthy assumed the role of MD and CEO. Ramamurthy, who had previously served with NSE for nearly two decades, was not unanimously chosen to replace the then MD and CEO Ashish Chauhan.

In fact, 29% of BSE's shareholders opposed Ramamurthy's appointment, while Chauhan went on to assume the top position at rival NSE. However, following Ramamurthy's successful first year in office, market experts and sector analysts have hailed it as BSE's turnaround year.

In response, NSE has already initiated several significant changes. Over the past month, India's largest stock exchange has reduced transaction charges by 1% starting from April, halved the lot size for Nifty 50 F&O contracts from 50 to 25, and introduced four new indices.Some analysts believe BSE may follow suit and reduce lot size for Sensex, and launch some new products to shore up its offerings. In all, an interesting battle lies ahead between Asia’s oldest stock exchange and one of world’s biggest stock exchanges.