SEBI has introduced significant changes to the weekly expiry rules for index derivatives in the Indian stock market, effective from November 20, 2024. Under the new rule, each exchange is permitted to offer weekly expiries for only one benchmark index. The National Stock Exchange (NSE) will hold weekly expiries solely for the Nifty 50 index, discontinuing them for Nifty Bank, Nifty Financial Services, and Nifty Midcap Select. Similarly, the Bombay Stock Exchange (BSE) will now offer weekly expiries only for the Sensex, discontinuing them for BANKEX and Sensex 50 indices.
These adjustments aim to address the high levels of speculative trading and volatility seen with multiple weekly expiries, intending to stabilize market conditions. Additionally, SEBI has raised the minimum trading threshold for derivatives from Rs 5 lakh to Rs 15 lakh and increased margin requirements to mitigate speculative risks further.
Weekly Expiry Restriction:
Each exchange is allowed to offer weekly expiries for only one benchmark index.
The NSE will conduct weekly expiries only for the Nifty 50 index.
The BSE will conduct weekly expiries only for the Sensex index.
Other indices, like Nifty Bank, Nifty Financial Services, and BANKEX, will no longer have weekly expiries.
Minimum Trading Threshold:
The minimum entry threshold for trading in index derivatives has increased from Rs 5 lakh to Rs 15 lakh.
Lot Size Adjustment:
SEBI has adjusted the lot sizes to ensure that the contract values on review days fall between Rs 15 lakh and Rs 20 lakh.
Upfront Premium Collection:
Starting February 1, 2025, an upfront premium payment will be mandatory for all option buyers.
Margin Requirements:
An additional 2% margin will be enforced on short options positions on expiry days, aimed at controlling volatility and risk.
Calendar Spread Removal:
From February 1, 2025, the benefit of offsetting positions across different expiries (calendar spread) will no longer be available on the contract expiry day.
Intraday Monitoring of Positions:
Beginning April 1, 2025, SEBI will implement intraday monitoring to enforce compliance with position limits throughout the trading day.
These rules aim to reduce speculation, stabilize the market, and protect retail investors.
SEBI Limits Weekly Expiry to One Benchmark Index Per Exchange: Key Changes Explained.
SEBI's Latest Update: Weekly Expiry Restricted to One Index Per Exchange Starting November 2024.
Big Changes to Weekly Expiry: SEBI Introduces Single Benchmark Index Rule for Exchanges.
SEBI Reforms Weekly Expiry: NSE and BSE Limited to One Index Each.
Understanding SEBI’s New Weekly Expiry Rule: One Benchmark Index Per Exchange.
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