With the removal of trading volumes from the weekly Bank Nifty and the market regulator’s new futures and options (F&O) regulations, there will be a substantial decrease in overall derivatives volumes, particularly for index options, said Ashishkumar Chauhan, managing director and chief executive officer of the National Stock Exchange of India (NSE).
He also added that the exchange doesn’t have a plan of action to offset the expected decrease in options volumes and that the impact on volumes remains to be seen. Market analysts have estimated NSE’s volumes to drop by 40%.
“Whether we do any additional work or not, our estimation is that there’s going to be a substantial decrease in our derivatives volume especially in index options, going forward,” Chauhan said in a conference call with analysts on Tuesday. Some of the volumes are expected to shift to monthly Bank Nifty and other contracts, while the rest would disappear, he said.
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After the Securities and Exchange Board of India’s (SEBI) new regulations restricting weekly expiries to one per stock exchange takes effect from November 20, the Bank Nifty contract will be discontinued. As a result, only the Nifty 50 and BSE’s Sensex series will continue to trade on a weekly basis.
According to the average daily turnover in NSE’s index options segment, Bank Nifty accounted for 47% of NSE’s daily options premium turnover in the first half of 2024-25 (April-September), while the Nifty 50 formed 36% of the total.
NSE’s October market pulse report reveals that of the Rs 60,186 crore in daily options premium turnover in the first half of FY25, the Bank Nifty accounted for Rs 28,136 crore, while the Nifty 50 contributed Rs 21,626 crore. The other two series — Finnifty and Midcap Nifty — together accounted for 17% of daily turnover during the same period.
About the company’s initial public offering (IPO), Chauhan said that there is no visibility yet on its IPO and that NSE has not received a no-objection certificate from the regulator. However, he said that the National Securities Depository’s (NSDL) listing is “on its way” and that the exchange will have to divest its stake from 24% to 15% through the IPO to meet SEBI regulations.
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