The Securities and Exchange Board of India (Sebi) has stuck to its guns by mandating a two-day weekly expiry regime for stock exchanges. In a circular on Monday, the market regulator said that the expiries of equity derivatives contracts on all exchanges will happen either on Tuesday or Thursday. It has also directed exchanges to seek its approval before launching or modifying any contract expiry or settlement day.
The circular comes amid increasing competition between the BSE and NSE for market share in the futures and options (F&O) segment. The regulator had floated a consultation paper on the same in late March, following NSE’s announcement to shift the weekly and monthly expiry day for Nifty contracts to Monday – just a day before BSE’s expiry on Tuesday.
As of March 2025, BSE’s market share in the derivatives market was at 36.5%, having significantly risen from 4.2% in the second quarter of FY24.
Following the market regulator’s guidelines, sources said that NSE is likely to seek Tuesday as the expiry day for its derivative contract, as this could compress BSE’s trading activity into just two days per week. This move could potentially shift market share back toward NSE. In fact, industry players believe that limiting expiry days to Tuesday or Thursday could help smooth market activity and ease the burden on surveillance systems. In addition, retail investors, who have often been very active in the derivatives market, would benefit from simpler trading patterns.
According to the regulator, in the multi-exchange framework, spacing out of expiry days through the week reduces concentration risk and provides an opportunity for stock exchanges to offer product differentiation to market participants. “At the same time, too many expiry days have the potential to revive expiry day hyperactivity, which could jeopardise investor protection and market stability,” it noted. The regulator has asked the exchanges to submit their proposals by June 15.
Moreover, the latest circular has also mandated that besides benchmark index options contracts, all other equity derivatives contracts, will be offered with a minimum tenor of 1 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).
According to Mrugank M Paranjape, the chairperson of the IMC Chamber of Commerce & Industry task force on Capital Markets and Managing Partner MCQube believes India as a country has signalled to the markets to have multiple exchanges. “For them to thrive and innovate, the actual detailing of any product design should be left to them as they know their business the best,” he said.