A significant change has been announced in India’s derivatives market. The Securities and Exchange Board of India (SEBI) has decided to restrict the expiry of equity derivatives contracts to either Tuesdays or Thursdays. This move aims to bring stability to the market, protect investors, and reduce excessive volatility on expiry days.
In this article, we delve into the various aspects of this new regulation, its impact, and what it could mean for the future.
What’s Happening?
SEBI issued a consultation paper on March 27, 2025, proposing fixed expiry days for derivatives contracts. The regulation was formally implemented through a circular released on May 26, 2025. According to the new rule, each stock exchange must now select either Tuesday or Thursday as the expiry day for its weekly benchmark index options contracts.
Additionally, all other equity derivatives contracts — such as benchmark index futures, non-benchmark index futures/options, and single stock futures/options — will have a minimum duration of one month. Their expiry will fall on the selected weekday (either the last Tuesday or Thursday of the month).
Impact of Losses in the Derivatives Market
SEBI’s decision is a key step towards managing rising volatility and investor losses in the derivatives segment. According to SEBI’s analysis released in September 2024, individual traders incurred a combined loss of Rs 1.8 lakh crore in the F&O market over the last three financial years (FY22 to FY24). Around 93% of these traders — nearly 9 out of 10 — lost an average of Rs 2 lakh each. The top 3.5% of loss-making traders (around 4 lakh individuals) reported average losses of Rs 28 lakh. Only 1% of traders made profits exceeding Rs 1 lakh.
In FY24 alone, 92.5 lakh individuals and proprietorship firms traded in index derivatives on the NSE, collectively losing Rs 51,689 crore. This data underscores the risks posed by F&O trading to retail investors — a risk SEBI is actively trying to curb through its latest reforms.
Read More About- SEBI’s New Derivatives Rules: Explained
History of Expiry Days
Before these rules, stock exchanges made several changes to their expiry schedules. For instance, BSE shifted its weekly Sensex expiry from Friday to Tuesday. NSE moved the Bank Nifty expiry from Thursday to Friday, and later to Wednesday. Earlier, NSE offered weekly expiries for four indices and BSE for two. Under the new regulation, each exchange can now offer a weekly expiry for only one benchmark index.
What Does This Mean for Investors?
The new rule brings several potential benefits for investors. Firstly, limiting expiries to Tuesdays and Thursdays may reduce overall market volatility, providing traders with more predictable and stable trading patterns. This is particularly beneficial for retail investors, who are often the most affected by expiry-day fluctuations.
According to SEBI, restricting weekly expiries to just one index per exchange could reduce speculative trading activity — ultimately lowering risk for retail participants.
Read More About- SEBI May Revise Rules for Options Trading — Here’s What’s Coming
What’s Next?
In its March 27 consultation paper, SEBI proposed fixed expiry dates to ensure better spacing between expiry sessions. Exchanges were instructed to wait for the final circular before making any structural changes.
Now that the circular is in place, exchanges must seek SEBI’s approval before making any modifications to their expiry or settlement schedules. They have also been directed to submit their compliance plans to SEBI by June 15, 2025.
*The article is for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
