Indian Market Update: BSE Surges 15% As NSE Defers F&O Expiry Shift Amid SEBI Review

Shares of BSE Ltd surged 15 per cent in Friday's trade after the National Stock Exchange (NSE) deferred its decision to change the weekly and monthly expiry dates for futures and options (F&O) contracts from Thursdays to Mondays. The development provided relief to BSE, as the market had anticipated a shift in trading volumes toward NSE's new schedule.

NSE's Initial Plan To Revise Expiry Dates

Earlier, NSE had announced that a circular would take effect from April 4, 2025, revising the expiry day for all existing contracts to a new expiry date of April 3. This meant that the expiry date for Nifty index weekly derivative contracts would move from Thursdays to Mondays, with the same rule applying to Nifty's monthly, quarterly, and half-yearly contracts.

New Circular Defers Implementation Until Further Notice

In a circular titled "Revision in Expiry Day of Index and Stock Derivatives Contracts - Update", issued on March 27, NSE stated that, "Members are required to note that the implementation of this circular (mentioned above) is deferred until further notice."

The circular clarified that the deferment aligns with the SEBI consultation paper dated March 27, 2025, on 'Final Settlement Day (Expiry Day) for Equity Derivatives', which proposed standardizing expiry days across all exchanges.

SEBI's Proposal On Expiry Days And Market Stability

The Securities and Exchange Board of India (SEBI) outlined several key recommendations in its consultation paper, suggesting that the expiry of all equity derivative contracts should be scheduled only on Tuesdays or Thursdays to ensure uniformity and reduce excessive market volatility.

The market regulator explained that this move of spacing out expiry days throughout the week would help reduce concentration risk while giving exchanges the ability to differentiate their products.

Further, SEBI cautioned against having too many expiry days, as it could lead to hyperactivity on settlement days, potentially undermining investor protection and overall market stability. Exchanges would still be permitted to maintain one weekly benchmark index options contract, choosing either Tuesday or Thursday for expiry.

For other equity derivatives contracts, such as benchmark index futures, non-benchmark index futures/options, and single-stock futures/options, SEBI proposed a minimum tenure of one month, with the expiry set in the last week of the month on either the last Tuesday or last Thursday. Additionally, SEBI would require exchanges to seek prior approval before launching or modifying expiry schedules for any derivative contract.

Potential Impact On NSE And BSE

If SEBI's proposed framework is implemented, NSE may be required to revert to its original Thursday expiry, while BSE would continue with its Tuesday expiry. This development could reduce concerns that BSE might lose trading volumes or suffer a decline in earnings due to NSE's earlier plan to shift to Monday expiries.

For now, the postponement of NSE's expiry revision has reassured market participants as THE investors view the decision as a stabilizing factor for the exchange's market share and trading volumes.

With SEBI's guidelines yet to be finalized, market participants will closely monitor further regulatory developments that could reshape India's derivatives trading landscape.