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Informist, Thursday, Mar. 27, 2025

 

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--SEBI issues consultation paper on equity derivatives expiry day
--SEBI proposes to keep all equity derivative contracts expiry on Tue or Thu
--SEBI issues consultation paper on F&O expiry day fixing by stock exchanges
--SEBI proposes bourses must seek nod to modify, launch contract expiry day
--SEBI paper: Bourses may choose Tue or Thu as expiry day for equity F&O

 

NEW DELHI – The Securities and Exchange Board of India proposed Thursday that expiry days of all equity derivatives contracts of a stock exchange be uniformly limited to either Tuesday or Thursday to space out expiry days between exchanges and avoid fixing of the first or the last day of week as expiry day. The markets regulator made this proposal in a consultation paper.

 

SEBI also clarified in the proposals that every exchange will continue to be allowed one weekly benchmark index options contract, and an exchange can choose the expiry day between Tuesday and Thursday. Further, SEBI has proposed that exchanges seek its prior approval before "launching or modifying any contract expiry day". In an equity derivatives contract, the expiry day represents the final settlement day of the contract.

 

SEBI has invited feedback from market participants to these proposals by Apr. 17. SEBI's proposals come on the back of BSE and National Stock Exchange of India fiddling with the expiry day for their respective weekly index options contracts.

 

The first move was made by the BSE when it changed the expiry day for its weekly Sensex options to Tuesday from Friday with effect from Jan 1. On Mar. 4, the NSE had announced that it will be shifting the expiry day of its weekly Nifty options contracts to Monday from Thursday with effect from Apr. 1.

 

Equity F&O traders have expressed their concern about frequent changes in expiry days by both the exchanges. If SEBI decides to implement the proposals after Apr. 17, the last day for comments to be received from market participants, the NSE will be forced to move the weekly Nifty 50 options expiry back to either Thursday or keep it on Tuesday, the same day as BSE. The BSE will have the choice to continue with Tuesday as the weekly Sensex options expiry or move it to Thursday.

 

Further, as per SEBI's proposals in its paper Thursday, if implemented, the BSE will have to keep the expiry for all monthly derivatives contracts on Sensex on the last Tuesday of the month if it continues Tuesday as the expiry day for weekly Sensex options. The BSE will also have to keep the same expiry day for monthly derivatives contracts on indices other than Sensex and for individual stocks.

 

The same principle will apply to NSE depending on whether it chooses Thursday or Tuesday as the expiry day for weekly options contracts on Nifty 50, if SEBI decides to convert the proposal into a circular.

 

According to SEBI, too many expiry days has the potential to revive expiry day hyperactivity. In October, SEBI had banned stock exchanges from having weekly derivatives on more than one index, and the index on which it could have weekly derivatives had to be a benchmark index and not a sectoral or thematic index. SEBI's justification was that there was over-trading in the weekly contracts on the expiry day and it posed risks to systemic stability.  End

 

Reported by Rajesh Gajra

Edited by Akul Nishant Akhoury

 

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