SEBI Restructures Derivatives Expiry Days

In a regulatory move set to reshape market dynamics in India’s equity derivatives segment, the Securities and Exchange Board of India (SEBI) has approved changes in the expiry days of weekly equity derivatives contracts for both the National Stock Exchange (NSE) and the BSE.

Revised Expiry Schedule

• NSE: Weekly equity derivatives contracts will expire on Tuesdays (from current Thursday).
• BSE: Weekly contracts will expire on Thursdays (from current Tuesday).
• Effective Date: The new schedule comes into effect September 1, 2025.
• Existing Contracts: Contracts already listed will retain current expiries, except long-dated index options, which will be realigned.
• New Contracts: No new weekly index futures can be launched after July 1, 2025, per SEBI’s directive.

SEBI's Rationale

• The changes are aimed at reducing hyperactivity and concentration risk on expiry days.
• SEBI wants to curb frequent expiry day changes and ensure product differentiation between exchanges.
• The regulator limited expiry days to two per week, pushing exchanges to choose separate days.

Implications for Market Participants

For NSE:

• NSE contracts, being more liquid and preferred, may attract increased participation with the shift to Tuesday.
• As expiries move closer to the beginning of the trading cycle, premium values just ahead of expiry are expected to decline, making trades more cost-effective.
• Increased activity and potential market share gains are anticipated.

For BSE:

• BSE may suffer a loss of momentum due to the shift, possibly ceding 200–300 basis points in market share, per Nuvama Research.
• Shares of BSE have already dropped over 10% from recent highs amid concerns of trading volume erosion.
• However, BSE CEO Sundararaman Ramamurthy maintains that Thursdays remain familiar to market participants, potentially softening the blow.

TET