Norm Change
Weekly F&O only on Sensex from Nov 20, weekly Bankex to stop Nov 18, says BSE
This story was originally published at 22:40 IST on 3 October 2024
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--BSE: To discontinue weekly F&O contracts on Bankex from Nov 18 end of day
--BSE: To stop weekly F&O contracts on Sensex 50 from Nov 14 end of day
MUMBAI – The BSE Ltd. will discontinue weekly futures and options contracts on the Bankex index from end of day on Nov. 18 and weekly contracts on the Sensex 50 index from end of day on Nov. 14, the exchange said in a circular Thursday. This effectively leaves weekly futures and options contracts on the Sensex as there are only three indices on which the weekly contracts are available.
The Securities and Exchange Board of India had Tuesday issued a circular directing stock exchanges to offer weekly futures and options contracts on only a benchmark index per stock exchange with effect from Nov 20. Thursday's circular by the BSE implies that the exchange has decided to retain Sensex as the sole index on which weekly contracts will be available.
The weekly Sensex contracts expire on Fridays and, till BSE specifically revises it, the expiry day will continue to be Friday post Nov. 20 as well. The BSE said it was discontinuing the weekly Bankex and Sensex 50 contracts due to the SEBI's circular. SEBI in that circular has made six key changes to the index derivatives framework, including the one weekly index futures and options contract per exchange restriction.
The Sensex 50 index of the BSE is different from the popular Sensex index, which has 30 companies. The difference between the indices is in the number of companies; one has 30 and the other 50. In weekly derivatives contracts, the trading has been so far concentrated on the Sensex, with volumes being very low on the Bankex, and negligible on the Sensex 50. Analysts are, therefore, not surprised at the BSE's choice to retain Sensex as the index on which weekly futures and options contracts will continue post Nov. 20.
The National Stock Exchange of India Ltd., which currently offers weekly options contracts in four indices—the Nifty 50, Nifty Bank, Nifty Financial Services, and Nifty Midcap Select--is yet to decide on the sole index to retain from Nov. 20 onwards for weekly expiry. Currently, The Nifty 50's weekly options expire on Thursdays, while those on the Nifty Bank expire on Wednesdays, the Nifty Midcap Select on Mondays, and the Nifty Financial Services on Tuesdays.
The NSE's Managing Director and Chief Executive Officer Ashishkumar Chauhan said at the sidelines of an event in GIFT City Thursday that the exchange will work with SEBI and seek its recommendation before choosing the index to retail for weekly contracts. Currently, the trading volume in weekly options on the NSE is the largest in the Nifty Bank. According to analysts, the NSE would prefer to retain the Nifty Bank contracts, but it would depend on the interpretation of the word 'benchmark' in SEBI's circular. SEBI has said the index on which weekly contracts can be offered has to be a benchmark index, but has not clarified whether the index can be the benchmark for a sector, such as Nifty Bank, or whether it has to be a benchmark for the broader market like Nifty 50. End
Reported by Rajesh Gajra
Edited by Manisha Baxla
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