NSE’s expiry schedule created major market movements that led BSE shares to surge 16% on March 28, 2025. This happened after NSE decided to hold off on its planned Monday expiry implementation. NSE currently handles all contract expiries on Thursdays, while BSE runs its weekly expiries on Tuesdays. The Securities and Exchange Board of India (SEBI) released a new proposal on March 27, 2025, to address this situation. The proposal limits equity derivatives contract expiries to either Tuesday or Thursday. SEBI’s regulatory intervention creates a well-laid-out system that requires exchanges to get SEBI’s approval before changing any expiry or settlement dates. This helps prevent market unpredictability and excess volatility.
SEBI Halts NSE’s Monday Expiry Plans
The National Stock Exchange (NSE) has put off its plans to change derivatives contracts expiry to Monday. This major change was set to happen on April 4, 2025. It would have moved all index and stock derivative contracts from their Thursday expiry to Monday.
The Securities and Exchange Board of India (SEBI) released a consultation paper on March 27, 2025. The paper proposed stricter rules for derivatives expiry schedules across exchanges. NSE then issued a circular that stated: “Members are required to note that the implementation of this circular is deferred until further notice in view of SEBI consultation paper dated March 27, 2025 on Final Settlement Day for Equity Derivatives”.
SEBI’s proposal lists these key restrictions:
- Expiries must happen only on Tuesdays or Thursdays
- Exchanges need to keep the same expiry days for all equity derivatives contracts
- Changes to contract expiry or settlement dates now need regulatory approval first
SEBI’s paper advises against Monday expiry. This would “provide optimal spacing between expiries across exchanges while avoiding choice of either the first day of the week or the last day as an expiry day”.
SEBI made it clear that “every exchange will continue to be allowed one weekly benchmark index options contract, on their chosen day (Tuesday or Thursday)”. But all other equity derivatives contracts must last at least one month. These include index futures, non-benchmark options, and single stock futures/options. They should expire in each month’s last week.
SEBI wants to make things more predictable for market participants and reduce risks. The regulator pointed out that “too many expiry days has the potential to revive expiry day hyperactivity which could jeopardize investor protection and market stability”.
The consultation paper is open for public feedback until April 17. SEBI plans to finalize these rules after reviewing industry input. NSE will stick to its Thursday expiry schedule for now instead of switching to Monday.
BSE Shares Jump as Expiry Day Competition Eases
BSE shares recorded their best single-day performance in almost six months on March 28, 2025, climbing 16% to close at ₹5,438. The stock rallied after SEBI stepped in to restrict derivatives expiries to Tuesdays and Thursdays. This helped BSE bounce back from its six-month lows seen earlier this month.
The trading session saw intense market activity. BSE’s stock opened at ₹5,000 and touched an intraday high of ₹5,534 before closing slightly lower. This marked a remarkable turnaround from BSE’s 9% drop when NSE first announced its Monday expiry plans.
Jefferies believes SEBI’s move to spread out F&O expiry days has reduced worries about BSE’s market share losses. The firm had earlier predicted a 12% drop in BSE’s earnings per share, but this scenario now seems unlikely.
Motilal Oswal Financial Services points out that BSE will keep its Tuesday expiry while NSE will likely switch back to Thursday. This gives BSE an advantage from time decay since its expiry comes earlier in the week. BSE can now continue to grow its market share.
Before SEBI stepped in, market watchers had projected BSE’s market share could drop from 22% to approximately 18% by February 2025. BSE’s index option premium market share had grown from 16.4% in December 2024 to 22.1% in February 2025 after it moved its expiry day to Tuesday.
BSE CEO Sundararaman Ramamurthy had stated, “We will not run behind derivative market share. However, there should be a spread between two expiries”. He stressed that proper spacing between expiry days helps products achieve their economic value, especially for hedging against volatility.
These regulatory changes have boosted confidence in BSE’s outlook and helped recover most losses from when NSE first announced its Monday expiry plans.
Exchanges Must Now Seek Approval for Expiry Changes
SEBI’s consultation paper mandates a new regulatory requirement. Exchanges must now get prior approval to modify any contract expiry or settlement dates. This represents a fundamental change in how India determines derivative market schedules.
The two major exchanges currently follow different expiry schedules. NSE conducts expiries on Thursdays while BSE holds them on Tuesdays. SEBI wants to formalize these arrangements and prevent random changes that could destabilize the market. “Exchanges will now seek prior approval of SEBI for launching or modifying any contract expiry or settlement day”.
The regulatory framework allows expiries only on Tuesdays or Thursdays. This standardization explicitly avoids “choice of either the first day of the week or the last day as an expiry day”. Monday and Friday expiries are no longer permitted.
The new guidelines allow each exchange to continue offering one weekly standard index options contract on their chosen day. NSE’s Nifty 50 will remain the only weekly expiry product, and other indices must move to monthly contracts. NSE had already announced that “starting November 20, 2024, the weekly derivative contracts for the Nifty Bank, Nifty Midcap and Nifty Financial Services will be discontinued”.
The regulatory oversight covers all equity derivatives contracts, including:
- Standard index futures
- Non-standard index futures/options
- Single stock futures/options
These instruments must now have “a minimum tenor of 1 month, and the expiry will be in the last week of every month” on the exchange’s designated day.
SEBI explained these restrictions noting that “too many expiry days has the potential to revive expiry day hyperactivity, which could jeopardize investor protection and market stability”. Historical evidence shows that “trading volume were significantly higher on expiration days” which can lead to “distortions and position adjustments”.
The public can submit feedback on these proposals until April 17, 2025. SEBI will then finalize the regulatory framework.
Conclusion
SEBI has made a bold move to change India’s derivatives market regulation. The market now has a clearer framework that limits expiry schedules to Tuesday or Thursday. BSE’s stock jumped 16%, and investors showed renewed confidence. This shows how much the new rules affect the market.
SEBI’s oversight has become stronger because exchanges need approval to modify expiries. This reduces market uncertainty. The exchanges must now work within these new rules. They need to focus on making their products different instead of competing through expiry day changes.
The market has become more stable. Traders get enough time between expiries to adjust their positions. This cuts down the risk of market swings. The new rules create a better trading environment for everyone. Standard monthly contracts for most derivatives products help achieve this balance.
SEBI has struck the right balance between market needs and investor safety. The rules are clear but still allow flexibility through weekly benchmark contracts. This framework helps India’s derivatives market grow steadily while protecting it from the risks of too much expiry day trading.
FAQs
Q1. What changes has SEBI proposed for derivatives expiry schedules? SEBI has proposed limiting expiry days for equity derivatives to either Tuesday or Thursday. Exchanges will need to maintain uniform expiry days for all contracts and obtain prior regulatory approval before modifying any expiry or settlement dates.
Q2. How will NSE’s expiry schedule be affected by SEBI’s intervention? NSE has deferred its planned shift to Monday expiries. The exchange will maintain its current Thursday expiry schedule until further notice, in light of SEBI’s consultation paper and proposed guidelines.
Q3. What impact has SEBI’s decision had on BSE’s stock performance? Following SEBI’s regulatory intervention, BSE shares experienced a significant 16% surge. This rally helped BSE recover from recent lows and eased concerns about potential market share losses.
Q4. How will the new expiry schedule affect market dynamics? The new schedule aims to provide optimal spacing between expiries, reduce concentration risks, and prevent excessive volatility. It’s expected to create a more balanced trading environment and improve market stability.
Q5. What changes are proposed for weekly and monthly derivatives contracts? Each exchange will be allowed one weekly benchmark index options contract on their chosen day (Tuesday or Thursday). All other equity derivatives contracts must have a minimum one-month tenor with expiry in the last week of each month.