The National Stock Exchange (NSE) will phase out weekly index derivatives contracts for Bank Nifty, Nifty Midcap Select, and Nifty Financial Services, with the changes taking effect on November 13, 18, and 19, respectively. Following these updates, the NSE will only offer weekly derivatives contracts for the Nifty 50 index. This decision aligns with a recent directive from the Securities and Exchange Board of India (SEBI), which states that exchanges can provide weekly options expiries for only one index per exchange starting November 20.
Also Read: Mutual Funds Boost Stakes in Key Large-Cap Stocks During Q2 FY25 – Find Here More!
SEBI introduced these measures on October 1 to strengthen the index derivatives framework, aiming to protect investors and enhance market stability. A key reform involves limiting derivatives contracts to a single benchmark index per exchange with weekly expiries, requiring exchanges to monitor intraday positions at least four times daily. Penalties will be imposed for breaches of intraday limits, similar to those for violations at the end of the trading day.
This change is a response to SEBI’s concerns about the speculative nature of index derivatives trading, especially on expiry days. The regulator aims to address a rise in options trading among retail investors, which could threaten household finances.
Also Read: Discover The Details Adani Enterprises’ $500M QIP Was Oversubscribed By Fourfold!
A SEBI report highlighted that individual traders faced net losses of 1.81 trillion rupees ($21.57 billion) in futures and options from 2021 to March 2024, with only 7.2% of traders making a profit. Under SEBI’s directives, the Bombay Stock Exchange (BSE) also announced discontinuing weekly index derivatives contracts for the Sensex50 starting November 14 and for Bankex from November 18.
These adjustments reflect SEBI’s objective to bolster the equity index derivatives market and improve investor protection, creating a more stable trading environment for participants.
