The Securities and Exchange Board of India (SEBI) on Thursday proposed that expiries of equity derivatives contracts of an exchange should happen either on Tuesday or Thursday. In addition, it has also proposed that exchanges seek its approval before launching or modifying any contract expiry or settlement day.
“This is to provide optimal spacing between expiries across exchanges, while avoiding the choice of either the first day of the week or the last day as an expiry day,” the consultation paper said, adding that this will offer predictability to investors and protect market integrity.
ALSO READNifty, Sensex steady led by financials; Tariff woes continue for autos
SEBI’s recent proposal comes amid increasing competition between the BSE and NSE for market share in the futures and options (F&O) segment. Currently, BSE’s market share is at an healthy 36.8% in this quarter and it has risen sharply from 4.2% in the second quarter of last fiscal.
Earlier this month, National Stock Exchange’s (NSE) recent announcement to shift the weekly and monthly expiry day for Nifty contracts to Monday from Thursday (effective from April 4) – a move had caused quite a flutter, leading to a fall in the share price of the listed BSE, as market participants expected the latter’s volumes to get adversely impacted. It was widely expected that after NSE’s move, BSE would change its expiry day. However, after today’s development, NSE would have to change the day of expiry.
The F&O market has already been shrinking after the market regulator, in order to curb retail investor participation, brough in stringent guidelines. At present, the total volume is half of second quarter of FY25 when it hit all-time highs. Further, in October, it also directed exchanges that they could have options contracts for one benchmark index with weekly expiry. Consequently, BSE moved its Sensex weekly expiry from Friday to Tuesday.
Besides this key proposal, the consultation paper also suggested that besides benchmark index options, all other equity derivatives contracts, that is, all benchmark index futures, non-benchmark index futures / options, and all single stock futures / options will be offered with a minimum tenor of 1 month, and the expiry will be in the last week of every month on their chosen day (that is last Tuesday or last Thursday of the month).
» Read More
