The Securities and Exchange Board of India (SEBI) has granted approval for a significant shift in the expiry schedules of weekly index derivatives contracts on the country’s leading stock exchanges. In a move designed to prevent overlapping expiries and enhance market stability, SEBI has sanctioned the National Stock Exchange’s (NSE) proposal to move its weekly expiry day from Thursday to Tuesday.
Simultaneously, the regulator has mandated that the Bombay Stock Exchange (BSE) shift the expiry day for its Sensex derivatives contracts from Tuesday to Thursday. This adjustment aligns with SEBI’s directive that both major exchanges must have their derivatives expiries on separate days to minimize market volatility and streamline trading activities.
Implementation Timeline
- BSE’s new expiry schedule will take effect from September 1, 2025.
- From July 1, 2025, BSE will cease introducing any new weekly contracts on index futures until the transition is complete.
These changes are expected to provide greater clarity, reduce systemic risk, and improve the overall efficiency of India’s derivatives markets. Market participants are advised to review their trading strategies and risk management frameworks in anticipation of the new expiry structure.
How Expiry Day Changes Impact Traders?
The change in expiry days will have a huge impact on trader strategies. Tuesday expiry at NSE means options buyers are likely to avoid holding positions over the weekend due to time decay, leading most to square off by Friday. This is expected to boost intraday trading activity on Mondays and Tuesdays, as traders focus on short-term strategies and capitalize on weekend news. Experts believe this will increase intraday volatility and trading volumes at NSE, benefiting day traders and potentially drawing more speculative activity.
In contrast, BSE’s Thursday expiry is more favorable for positional traders who can hold options for a full week without worrying about weekend time decay. This setup is likely to attract traders with a longer-term view, though it may compress strategy windows into fewer days for those looking to trade around expiry.
The Brokers expect their income to stay the same or even go up for a while, because trading volumes will move from one exchange to another instead of falling. Traders should get used to the new system quickly, and the change is expected to go smoothly. The main goal is to cut down on risky trading and encourage smarter, more careful trading in the derivatives market.
Experts think NSE will benefit the most. The new setup gives option sellers and traders three main days, Friday, Monday, and Tuesday, to make the most of price changes before expiry. On the other hand, BSE might see less trading and lower profits, but it could also find new ways to attract traders in a changing market.
This change is part of SEBI’s bigger plan to make India’s derivatives market more modern, efficient, and in line with global practices. Everyone, big investors, brokers, and small traders, will need to adjust to the new expiry schedules. This could also lead to more chances for clever trading and new strategies between the exchanges.
Analyst’s view on the news
Analysts forecast that NSE may regain up to 5% of the index options market share. The shift of NSE’s derivatives expiry to Tuesday represents a structural change for India’s market, aimed at lowering volatility, enhancing trading efficiency, and aligning India’s expiry schedule more closely with international norms.
Meanwhile, Goldman Sachs anticipates a 13% decline in BSE’s index options premium turnover and an 8% reduction in earnings. However, some market experts suggest that BSE still has the potential to carve out a unique position within the evolving landscape.
Written by Sridhar J
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
