BSE Ltd (BSE) Q2 FY23 Earnings Concall Transcript

BSE Ltd (NSE:BSE) Q2 2023 Earnings Concall dated Nov. 07, 2022

Corporate Participants:

Anand Sethuraman — Head of Investor Relations

Nayan Mehta — Chief Financial Officer

Analysts:

Paresh Jain — Motilal Oswal — Analyst

S. K. Shrivastava — Individual Investor — Analyst

Devesh Agarwal — IIFL Securities — Analyst

Amit Chandra — HDFC Securities — Analyst

Unidentified Speaker — 

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the BSE Ltd. Q2 in FY ’23 Investor Conference Call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I’ll now hand the conference over to Mr. Anand Sethuraman, Head, Investor Relations, BSE Ltd. Thank you, and over to you, sir.

Anand Sethuraman — Head of Investor Relations

Thank you so much. Good evening, everyone. This is Anand from BSE Investor Relations. And welcome to BSE’s Earnings Call to discuss Q2 FY 2023 results. Joining us today on this earnings call is BSE’s leadership team, consisting of Mr. Nayan Mehta, Chief Financial Officer; Mr. Neeraj Kulshrestha, Chief Regulatory Officer; Mr. Sameer Patil, Chief Business Officer; Mr. Girish Joshi, Chief of Trading Operations and Listing Sales; Mr. Kersi Tavadia, Chief Information Officer. Do note that the conference is being recorded and a transcript of this call will be made available on the BSE website.

Before we get started, I would like to take this opportunity to once again remind you that our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Any forward-looking statements that we make on this call are based on assumptions as of today, and BSE assumes no obligation to update these statements as, a result of new information or future events.

I would now request Mr. Nayan Mehta, the Chief Financial Officer, BSE, to give brief overview of the company’s financial and business performance. Do note that this session will conclude with a Q&A session. Over to you, sir.

Nayan Mehta — Chief Financial Officer

Thank you, Anand. Good evening, everyone, and thanks for joining the call today. I hope all of you and your loved ones are safe and keeping well. Before I start with the update, I’m glad to say that BSE has continued to function normally without any interruptions and glitches and has been able to improve its revenues. We’re also pleased to inform you that BSE group continues to expand its activities to service its clients and the economy on the back of the strength of its integrated and diversified model.

In Q2 FY ’23, BSE has expanded platform offerings to launch electronic gold receipts and KYC KRA to service the Indian capital market, and the economy. Let me now start with the financial updates. I’m happy to inform that despite the volatile market conditions, the BSE Group delivered a stable financial performance with total revenues of INR250 crores for Q2 FY ’23, a growth of 6% as compared to corresponding quarter last year. BSE’s official revenues have grown by 5% to INR198 crores from INR189 crores in the corresponding quarter of the previous year. BSE’s net profit attributable to shareholders of the company stands at INR34 crores as compared to INR65 crores in the corresponding quarter of previous year. The decline is because of the added contribution to the post-settlement guarantee fund to the tune of INR36 crores at a consolidated level, which is an increase of 485% as compared to corresponding quarter last year.

I will now share some of the key financial numbers on a consolidated basis for the quarter ended September 30, 2022, as compared to corresponding quarter of the previous year. The clearing and settlement operational revenues increased by 67% to INR16.9 crores from INR10.2 crores. Treasury income from clearing and settlement funds has increased by 71% to INR22.9 crores from INR13.4 crores. Listing-related income increased by 3% to INR58.8 crores from INR56.9 crores. Other operating revenue that is data dissemination fees, trading income, software income increased by 30% to INR18.3 crores from INR14 crores. Investment income increased by 20% to rupees INR36.6 crores from INR30.1 crores. The operating EBITDA has reduced to INR13.4 crores from INE53.2 crores with operating EBITDA margin reducing to 7% from 28% person earlier. The net profit margin stands at 12% as against 28% earlier.

On the business side, let me start by covering our primary market segment. Funds raised by India Inc. is well up last year’s speed as geopolitical uncertainty along with other macro factors affecting sentiments. Since BSE has revised its listing fees with effect from April 1, 2022, slight uptick in the annual listing fee is seen. Overall, BSE continues to be the market leader when it comes to raising funds in India by India Inc., having enabled issuers to raise INR3.7 lakh crores through issue of equities, bonds, commercial paper, municipal bonds. investment IP, etc. The IPO momentum of 2021 has not carried over to 2022 so far, which has resulted in lower book building and listing processing income for the quarter. We expect IP activity to pick up in the second half of FY 2023.

The total number of investors registered with BSE now stands at 11.7 crores. BSE’s trading segment after a record-breaking turnover in FY ’22, volatile market conditions have resulted it go down during the first half of FY ’23. However, BSE has been able to improve its market share for the quarter under review. Facing the challenges of volatile market environment, BSE’s performance in trading segment was muted, but currency, mutual funds, and insurance segment demonstrated strong growth. For the quarter ended September 30, 2022, BSE’s average daily turnover in equity segment stands at INR4,740 crores, a growth of 17% as compared to the previous quarter. In the equity derivatives segment, the average daily turnover stands at INR2.26 lakh crores, a growth of 88% as compared to the previous quarter. In the currency derivatives segment, the average daily turnover increased to INR32,161 crores as compared to INR24,567 crores in the previous quarter, a growth of 31% as compared to the previous quarter.

I’m also happy to inform you that BSE has become India’s first exchange to successfully launch electronic gold receipts after receiving final approval from SEBI. A total of four new products based on electronic gold receipts, consistent of delivery units of 10 grams and 100 grams of 995 grade and 999 grade were made available to trade during the Muhurat session on October 24, 2022. This reflects our commitment to continuously facilitate access to high-quality investment-based products and services to investors. Our business teams are reaching out to market participants including banks, vaults, wholesalers, retailers, importers, exporters, etc. who will participate in this ecosystem. BSE expects bigger trade and liquidity in the days ahead as it continues to educate the market and onboard [Indecipherable].

I shall now discuss our mutual fund distribution platform. BSE StAR MF, India’s largest mutual fund distribution platform, continues to grow at a remarkable pace with the total number of transactions growing by 39% to reach 5.91 crores transaction during the quarter from 4.3 crores in the same period last year. BSE’s turn in this platform continues to scale new heights in terms of transactions with the platform processing a high of 2.08 crore transactions for September 2022.

I shall cover development at our subsidiary companies now. BSE promoted International Exchange at GIFT City, Gandhinagar. India INX, that is India International Exchange, IFSC, has been growing exponentially ever since it commenced trading activities on January 16, 2017 with the average daily trading turnover of USD14.7 billion and the market share of 92.1% for the quarter ended September 30, 2022. India INX has about USD70 billion medium term notes established and about USD50 billion of bonds listings till date. There has been no change to BSE’s stake in India International Exchange, IFSC, which stands at 61.93% and 59.92% in India International Trading Corporation as on September 30, 2022.

On the insurance distribution front, BSE Ebix Insurance Broking where BSE holds 40% stake through its subsidiary BSE Investments Limited, is now integrated with 26 insurance companies. The total premium collected is INR13.2 crores for the half-year ended September 30, 2022, and a growth of 78% from the same period last year. BSE E-Agricultural Markets Limited, also called as BEAM, B-E-A-M, our transparent commodity spot trading platform to facilitate spot commodities transactions across the value chain has now enabled 1,121 members and executed trade worth INR11.7 crores in agri and steel segments on the platform during the quarter ended September 30, 2022. The company is working closely with several state governments and their agencies for direct procurement and disposal of commodities.

As updated in the earnings call speech last quarter, Hindustan Power Exchange where BSE has a stake of 22.61% through its wholly-owned subsidiary BSE Investments Limited, had commenced operations with contingency market segment, namely intraday and day ahead contingency, Day Ahead Market, Real-Time Market, and Green Day Ahead Market segments. The volume traded at HPX, that is Hindustan Power Exchange, is relatively modest and the exchange is continuously onboarding new members and exploring new products to be launched which can result in higher volumes going forward.

I’m also pleased to inform that BSE Technologies Limited, a private-owned subsidiary of BSE, launched KYC registration agency, KRA, on October 27, 2022. The KYC registration agency is a semi-regulated intermediary that grants the market participants authorization for investors’ KYC, which is mandatory for investment in the securities market. As updated in our earlier call, SEBI has recorded its in-principle approval to BSE Technologies for setting up trade receivables discounting system, also called as TReDS. The final approval is awaited.

With this update, I now hand over the call to Anand.

Anand Sethuraman — Head of Investor Relations

Thank you so much, sir, for these updates. With this overview, let me now welcome you once again and invite you all for a question-and-answer session. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We request you to please limit your questions to two per participant. Should you have any further questions, you may join the queue back. The first question is from the line of Paresh Jain from Motilal Oswal. Please, go ahead.

Paresh Jain — Motilal Oswal — Analyst

Yeah. Hi. Good evening, everyone. Just two questions from my side. Firstly, could you give some clarity on the SGF thing? Why we had to pay such a large amount in this quarter? Any guidance for the full year?

Nayan Mehta — Chief Financial Officer

So, Paresh, Settlement Guarantee Fund is basically determined by various factors which are stipulated by the SEBI guidelines. And at BSE, it’s basically derived out of volumes in any segment — the concentration of positions in any segment, the volatility in that segment. So, during the last quarter, our currency derivatives volumes increased significantly as compared to earlier periods. Because of that, it necessitated that the core SGF, as determined and computed according to the guidelines of SEBI, has to be increased. And that is why ICCL, our Clearing Corporation, had to make a contribution of INR36 crores to core SGF.

Paresh Jain — Motilal Oswal — Analyst

Okay. So, okay, that’s primarily based on the volatility that we’ve seen. Okay. Second question is on the StAR MF thing. If I back-calculate the per transaction revenue, it’s inched up sequentially. Why would that happen? And what should be the thought process going ahead?

Nayan Mehta — Chief Financial Officer

Paresh, as the mutual fund revenue are concerned, in — one July 1, 2022, this SEBI implemented a rule. SEBI implemented a process which is called as — basically call it as Non-Pooling, whereby, earlier, the intermediaries would collect the money from the investors and at the end of the day, they will spend one particular amount to the cleanup sum owed to the Clearing Corporation. So, what used to happen is that, that — the money which is collected by us, we have to pay payment gateway charges to our vendors. At the same time, this money is back-to-back recovered from our AMCs, Asset Management Companies. So, while our topline has increased, to some extent there, it has been offset by the increase in our expenses.

Paresh Jain — Motilal Oswal — Analyst

Okay. So, this is a one-quarter thing, or it’ll be now recurring and this — the gross run rate would be similar in this range?

Nayan Mehta — Chief Financial Officer

Yeah, it’ll be recurring, Paresh, because this has — obviously, it’ll have some incremental expenses also. But likely that they will be slightly less than what we are recovering.

Paresh Jain — Motilal Oswal — Analyst

Okay. Interesting. Interesting. And with regards to equity derivatives, any changes in the thought process on charging the segment for transactions?

Nayan Mehta — Chief Financial Officer

Yeah. So, we have already started, but that is very miniscule on the options. But we look forward. See, as you understand, we’re still giving incentives for the order flow. So, we continue to do that. And eventually, when we see sizable amount and then we can think about charging them.

Paresh Jain — Motilal Oswal — Analyst

And then lastly, anything on the CEO appointment?

Nayan Mehta — Chief Financial Officer

No, there is no information as of now.

Paresh Jain — Motilal Oswal — Analyst

There’s no further updates?

Nayan Mehta — Chief Financial Officer

Yeah. No, no. Okay.

Paresh Jain — Motilal Oswal — Analyst

Okay. Thank you.

Operator

Thank you. Participants are requested you to please limit your questions to two per participant. Should you have any further questions, you may join the queue back. The next question is from the line of S. K. Shrivastava, Individual Investor. Please, go ahead.

S. K. Shrivastava — Individual Investor — Analyst

Yeah. Respected, sir, many thanks for the giving the opportunity for the question. First, I would like to thank all the respected members of BSE for making it the world’s — India’s best exchange. I have a very small question. Is there any plans of listing of any of the subsidiaries of BSE in near future? Thank you.

Nayan Mehta — Chief Financial Officer

No, there are no such plans.

S. K. Shrivastava — Individual Investor — Analyst

Okay, sir. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Devesh Agarwal from IIFL Securities. Please, go ahead.

Devesh Agarwal — IIFL Securities — Analyst

Good evening, sir. My first question is, you did mention that other expenses are up on account of SGF contribution, but the increase that we see on a sequential basis, almost INR45 crores, while the SGF contribution is INR36 crores. So, is there any other one-off as well in this number?

Nayan Mehta — Chief Financial Officer

So, Devesh, there are — other than the SGF, the increase is also on account of increasing Clearing House charges. So, since our — the number of transactions which happened on BSE, to the extent they get cleared by NCL or by ICCL. So, obviously, BSE has to pay Clearing House charges. So, those are the ones which we — which have increased by about INR4.5 crores. Also, there has been an increase in professional fees, which I just mentioned earlier, because — to offset the income which we’re receiving from the mutual funds segment. So, these are the two reasons why our expenses have increased other than SGF.

Devesh Agarwal — IIFL Securities — Analyst

Understood, sir. And would you be able to quantify, sir, how much is the increase in mutual fund expense?

Nayan Mehta — Chief Financial Officer

So, it’s basically a provision right now, but the total amount, depending on — based on the number of transactions which have come to us directly instead of getting pooled at the intermediaries, the total amount comes to about INR7 crores.

Devesh Agarwal — IIFL Securities — Analyst

Okay. And, sir, in other income, also is it all M2M gains or there is some one-off income that has been booked?

Nayan Mehta — Chief Financial Officer

Devesh, which amount are you referring to here?

Devesh Agarwal — IIFL Securities — Analyst

The INR36.6 crore number that you have…

Nayan Mehta — Chief Financial Officer

Yeah.

Devesh Agarwal — IIFL Securities — Analyst

…for the quarter.

Nayan Mehta — Chief Financial Officer

So, the M2M component, obviously, has been totally controlled now, means the total M2M for us as on date is about INR4 crores at the most. And that is positive for us in this. What we have done, Devesh, is that cautiously after the two hikes which happened in the first quarter, we have moved away from instruments which are mark-to-market. And, again, there was always a risk of further depreciation considering the bites we were getting on with respect to the happenings in U.S. and globally as well as in India. So, that amended — last one or two quarters, we have really got some significant good deal in debts, particularly in three development loans and also in fixed deposits. So, we have actually moved a lot of money from our — from the mutual funds segment to debt and — to basically debt and fixed deposits.

Devesh Agarwal — IIFL Securities — Analyst

The overall volatility will now come down from the other end?

Nayan Mehta — Chief Financial Officer

Yes.

Devesh Agarwal — IIFL Securities — Analyst

Is this run rate around INR30 odd crores is what we can build in for our estimates, quarterly run rate?

Nayan Mehta — Chief Financial Officer

In the best-case scenario, we can expect a return of around 6.5%.

Devesh Agarwal — IIFL Securities — Analyst

Understood, sir. And, sir, on your new spot gold exchange, the EGR that you have launched, what we understand from the other exchange that there are certain GST issues which can restrict the overall volume growth on that platform. Your views on the same? And secondly, are there any plans to start charging for this platform or we have certain time limit before we start charging for this?

Nayan Mehta — Chief Financial Officer

So, Devesh, just to answer this, we launched it only last week at the Muhurat during Diwali, and we got a very good response for this, and we have only started charging for it right from day one. Yeah? And second, as far as the clarification, yeah, we still await clarification on the GST and it might come soon. So, then this product can really take off then.

Devesh Agarwal — IIFL Securities — Analyst

Okay. What are the charges for this?

Nayan Mehta — Chief Financial Officer

So, it is INR345 per crore. Same as equity, because it’s a part of the segment — equity segment.

Devesh Agarwal — IIFL Securities — Analyst

Understood. Perfect, sir. Thank you so much.

Operator

Thank you. [Operator Instructions] You have a question from the line of Amit Chandra from HDFC Securities. Please, go ahead.

Amit Chandra — HDFC Securities — Analyst

Yeah. Thanks for the opportunity. Sir, now you mentioned about the hike in listing fees. So, it’s applicable from April 1. So, the fees was hiked up for all companies or only for exclusive companies? And what is the rationale behind, because we already have increased it, in the past trying to be at par with NSE? So, are you planning to increase it a little higher from here?

Unidentified Speaker —

The fees were increased marginally for all companies and some — the company where the market cap is higher, so where the market cap is higher, we add link fees to the market cap for a highly capitalized company.

Amit Chandra — HDFC Securities — Analyst

Okay.

Unidentified Speaker —

And this is on a minimum regular basis every two years.

Nayan Mehta — Chief Financial Officer

So, Amit, in fact, this is the industry practice now. The competing exchange also levies listing fees based on market cap. Earlier, we were filing it on the basis of capitalization — sorry, the equity capital. And so, this is one improvement which have made in our revenue profile.

Unidentified Speaker —

And every few years what happens because of the increase in regulatory activities that are expected on all these companies. So, this is like something like that. So, it’s not that this is out of the blue. This is — this will happen, continue happening every two years.

Amit Chandra — HDFC Securities — Analyst

Okay, sir. And in the StAR MF, obviously, there is increase in the realization. But excluding the pass-through, are we seeing additional pricing pressure from mutual funds, or all the pricing is stable at from different mutual funds side?

Nayan Mehta — Chief Financial Officer

Amit, there is no pressure from the mutual funds side, because our charges are very, very low.

Unidentified Speaker —

Correct. And like this was a new change which has come about, and as Nayan has already — as we have already said, that this is currently our provisioning and also separately discussions are also on. So, let’s see where we go in that.

Amit Chandra — HDFC Securities — Analyst

Okay. And, sir, any update on demonetization of — or, the monetization of the StAR MF platform, because it has been there for the last one to one and a half years, but we have not received any update? So, what exactly is going on? Is it still into consideration or is it — or we have not received any interest from any investors in that?

Nayan Mehta — Chief Financial Officer

Amit, basically, we have not solicited any interest from anyone actually. Last two-three months, obviously, because of the much higher number of transactions which have come to us directly, we are basically ensuring the robustness of our systems and the business. So, probably, we will — but as I’ve told earlier — as we have told earlier, in case there is any strategic interest or financial interest by the previous investors, obviously, we will not stop that person from coming to approaching us.

Amit Chandra — HDFC Securities — Analyst

So, anyone has not opposed or there has been like disconnect in terms of valuations being asked, or any update on that would be helpful, sir?

Nayan Mehta — Chief Financial Officer

No, we have not pursued much on that at this point, Amit. There were one or two inquiries in between, but we felt it was not serious, so we left it.

Amit Chandra — HDFC Securities — Analyst

Okay. And lastly, sir, on charging because INX volume has been increasing, and any plans on charging on INX in the near term, because — are any threshold in mind wherein that — if it is that then we’ll start charging? Or, is it going to be free for next few years?

Nayan Mehta — Chief Financial Officer

So, everybody, was, in fact, waiting for this connect to happen. It is also happened now. So, but still just to be in the competition, at least, for the time being, we think we should — we won’t be charging. We continue not to charge.

Unidentified Speaker —

As done by competition.

Nayan Mehta — Chief Financial Officer

Yes. As done by competition.

Amit Chandra — HDFC Securities — Analyst

Okay, sir. Thank you. If I have any further questions, I will be in the queue.

Nayan Mehta — Chief Financial Officer

Sure. Of course, Amit. Thank you.

Operator

Thank you. [Operator Instructions] Next question is from the line of Devesh Agarwal from IIFL Securities. Please, go ahead.

Devesh Agarwal — IIFL Securities — Analyst

Thank you, again, sir, for the opportunity. Just two questions from my side. I missed your comments on the KRA business. So, what is the update here, sir?

Nayan Mehta — Chief Financial Officer

So, KRA business, we have already — we have gone live with the business. And so, we are live. We are one of the KYC KRA participants now in the industry, and we are offering our services. And as we — and now this business, we’ll will take this forward.

Devesh Agarwal — IIFL Securities — Analyst

Okay. We do — sir, CDSL is one of the leading KRA where we own 20% stake. So, why have we thought to go through separately in this business? Any thoughts around that?

Nayan Mehta — Chief Financial Officer

So, in this particular thing, see, what happened is there was this whole background where SEBI itself wanted exchanges to also consider this activity. So therefore, all exchanges. Now, what we realized is that as an exchange, there were synergies, because all investors whether whichever segment they come to, essentially, from a member perspective, I mean, there is a lot of synergy in that. So therefore, it was felt. And that is the whole reason — I mean, this question is in a sense late because we have already announced much earlier that we are already going to pursue this business. So that was it.

Devesh Agarwal — IIFL Securities — Analyst

Understood, sir. And, sir, finally on HPX, I think, all the projects are now being launched somewhere in July-August, but still I think the market share has been subdued. So, any plans out there? What are your thoughts in terms of improving the volumes and the market share on that platform?

Nayan Mehta — Chief Financial Officer

So, see, those are actively under consideration by the board, the respective board, because, see, what happened is the most important thing for us, it was first to get the license and then get started. And then it takes — what happens is in this industry, it’s a very limited industry. There are new participants — there are members who need to be onboarded, etc., like there is all this process which is on those participants. And there is opportunity also there. So — but it will take some time, but hopefully, since — I mean, I understand that there is an incumbent there. There is — there will be competition. It will take some time, but it will happen. And it’s just that it’s early days. But we are now ready, and we have one of the best platforms, by the way, in the power sector, power and power exchange, which is well acknowledged by the market participants also. Now the point is to get liquidity there.

Devesh Agarwal — IIFL Securities — Analyst

Understood. And any plans to get into power derivatives, sir?

Nayan Mehta — Chief Financial Officer

So, that is — again, see this is a product which SEBI has to approve. So, there is no immediate — there is no such proposal from SEBI. So, you understand how the scene was, right? We can only look at products when SEBI approves products, like in EGR, when SEBI approved it, then only we can launch.

Devesh Agarwal — IIFL Securities — Analyst

Right, sir. Perfect. Thank you.

Nayan Mehta — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is the last question from the line of Paresh Jain from Motilal Oswal. Please, go ahead.

Paresh Jain — Motilal Oswal — Analyst

Yeah. Hi. Thanks, again. What would be your free cash on the balance sheet as of date?

Nayan Mehta — Chief Financial Officer

Paresh, on a standalone basis, it is about INR1,376 crores.

Paresh Jain — Motilal Oswal — Analyst

Okay. This is available to investors, right?

Nayan Mehta — Chief Financial Officer

Yeah.

Paresh Jain — Motilal Oswal — Analyst

Okay. Great. And secondly, more longer-term and from a three- to five-year perspective, do you see any of these new products that we’ve spoken so much about, your INX, your gold receipts, power exchange, derivatives, any of these contributing or together contributing to, say, 15%, 20% of the revenues? How should we think about it from a, say, three- to five-year perspective from these products particularly?

Nayan Mehta — Chief Financial Officer

Paresh, each of the segments is a gold mine. The thing is that the time has to come. Each of this — see, we are in a very unique business, whenever type of duopoly or oligopoly. And sometimes what happens is that, that the product comes first and the market then develops. So, we have set up the products, we have set up the infrastructure. We are now marketing our products. But some things might happen in one year, some things might happen in two years, some things might happen in three years. But the fact is that each of them is not a product where you can lose hope or you can say that this will not work.

Paresh Jain — Motilal Oswal — Analyst

Actually, from a point of view that like our revenues have been kind of in that trajectory, not seen very strong growth in spite of the fact that the markets have been very buoyant. So, that’s where I was coming from, as to how do we see BSE’s revenues growing in the next three to five years? And possibly, while the core business of cash volumes might not grow at an alarming pace, but the other segment can really drive up the revenues and possibly, we can come — we can look at something like 18% to 20% kind of revenue calendar. Is that a possibility?

Nayan Mehta — Chief Financial Officer

Paresh, we are in a financial market, when things happen, they happen in a very nonlinear fashion. I feel you’ve had it since many years now and you have seen however revenues change with different economic and macro conditions. So — and the thing is that if some kind of starts working, it can start generating a stream of revenues which we would have not thought of earlier. So, frankly, we cannot — I’m in the same shoes like as you are. We are working towards delivering the best results out of our efforts. But we have to wait and see how it happens.

Unidentified Speaker —

Also, Paresh, if you look at the mutual fund contribution, we started mutual funds way back in 2009 and we started pricing it only recently till — back couple of years, okay? But now if you see the contribution towards the BSE, it’s huge. So, like that — but on the positive note, the EGRs — when we have launched the EGR, right from day one, we have started applying transaction charges on the trade. So, that is also a positive.

Paresh Jain — Motilal Oswal — Analyst

And the last question, SGF, is there any discussion with the regulator to allow flexibility to withdraw from it?

Nayan Mehta — Chief Financial Officer

So, see those discussions are ongoing. So, they keep happening. And the regulator has — agrees, sometimes does not agree, and then we have to work around some of the regulations. We’ll see what further can be done, okay? So, the limited point, okay, so I’ll just twist this whole thing into just one specific point, that whenever we have an amount to be set aside for SGF, please understand that it’s a good problem to have. Because what it means is there are volumes, there is a lot more clearing taking place in that particular Clearing Corporation. And that is the reason which necessitates the increase in allocation towards this SGF. So, all that I’m trying to tell you is that the good problems come this way, there will be — and what it means is the volumes, once they come, along with that, we have further abilities in terms of how to get — monetize them further, etc. So, look at the positive side of this thing, while it’s an allocation, no doubt, but what it means is that there are volumes which are coming.

Paresh Jain — Motilal Oswal — Analyst

Okay. Sorry, just last one more. CDSL stake-sale in 20% to 50%. Any thoughts there now?

Nayan Mehta — Chief Financial Officer

Sorry?

Unidentified Speaker —

CDSL stake-sale.

Nayan Mehta — Chief Financial Officer

So, Paresh, we will have to reduce 5% by October 1 — by October 2, 2023. That’s the mandate as per the regulations. And at the appropriate point of time, we would be taking appropriate decision on that matter.

Paresh Jain — Motilal Oswal — Analyst

Okay. Thank you so much. All the best.

Nayan Mehta — Chief Financial Officer

Thank you.

Unidentified Speaker —

Thank you.

Unidentified Speaker —

Thanks, Paresh.

Operator

Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Anand Sethuraman for closing comments.

Anand Sethuraman — Head of Investor Relations

Thank you so much and thank you, all, for being here today. Do know that should you have any further questions, or you need any particular information or data, please reach out to us or write to us at bse.ir@bseindia.com. Thank you so much.

Nayan Mehta — Chief Financial Officer

Thank you.

Unidentified Speaker —

Thank you.

Unidentified Speaker —

Thank you.

Operator

Thank you on behalf of BSE Ltd.

[Operator Closing Remarks]