NSE to discontinue weekly derivatives contracts on Bank Nifty, Nifty Midcap and Nifty Financial Services

The National Stock Exchange (NSE) of India, on Thursday, announced the discontinuation of weekly derivatives contracts on three of its indices: Bank Nifty, Nifty Midcap Select and Nifty Financial Services.

This is in accordance with the Securities and Exchange Board of India’s (SEBI) circular dated October 1, 2024, aiming to enhance investor protection and market stability.

The SEBI circular stated that each Stock Exchange can provide derivatives for only one of its benchmark indices with weekly expiry effective from November 20, 2024.

In a circular issued on October 10, 2024, the NSE said that it would only continue the weekly expiry option on the Nifty 50 Index. It stated that the last trading date with weekly index option expiry will be available for those indices as follows:

• Bank Nifty: November 13, 2024
• Midcap Select: November 18, 2024
• Nifty Financial Services: November 19, 2024

“No new weekly index option contracts will be generated with an expiry date beyond the last expiry date for the respective index as mentioned above,” the circular read.

In line with SEBI’s circular, the BSE on October 3 announced that the weekly index derivatives contracts will be discontinued for the Sensex50 and Bankex on November 14 and November 18, respectively.

The new regulations also require the exchanges to monitor intraday positions at least four times a day and include penalties for breach of these intraday limits similar to the current ones.

These measures have been taken keeping in mind the speculative nature of index derivatives trading, especially on contract expiry days.

A report published by SEBI in September revealed that 9 out of 10 individual traders in the equity futures and options (F&O) segment suffered losses. The total losses suffered by these traders were more than ₹1.8 lakh crore over the three-year period between FY22 and FY24.