NEW DELHI: Ending days of speculation, capital market regulator – the Securities and Exchange Board of India (Sebi) – has said that expiries of all equity derivatives contracts of an exchange will be uniformly limited to either Tuesday or Thursday.
Every exchange will continue to be allowed one weekly benchmark index options contract on their chosen day (Tuesday or Thursday).
Besides benchmark index options contracts, all other equity derivatives contracts – all benchmark index futures contracts, non-benchmark index futures/options contracts, and all single stock futures and options contracts -- will be offered with a minimum tenor of one 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).
Exchanges will now require Sebi’s prior approval to launch or modify any contract expiry or settlement day.
The market regulator came up with its decision after receiving feedback on a consultation paper floated in March this year.
Explaining its rationale for the decision, Sebi says currently, stock exchanges can decide upon the expiry day of their derivatives products. However, in the multi-exchange framework, spacing out expiry days through the week reduces concentration risk and provides an opportunity to stock exchanges to offer product differentiation to market participants. It further says at the same time, too many expiry days have the potential to revive expiry day hyperactivity, which could jeopardize investor protection and market stability.
Currently, the BSE and the NSE use Tuesdays and Thursdays, respectively, as expiry days for single stock and index derivatives contracts, a practice formalised in January 2025.
The move comes amid a surge in derivatives trading volumes, particularly in index options on expiry days, which has raised concerns over concentration risk and market integrity.
The move to standardise the expiry days of equity derivatives contracts across exchanges is aimed at balancing market stability, investor protection, and innovation.
To operationalize the new system, stock exchanges will have to submit their proposal to SEBI by June 15, 2025.
Stock Exchanges and Clearing Corporations are directed to take necessary steps to put in place systems for implementation of this Circular, including necessary amendments to the relevant bye-laws, rules and regulations, if any.