BSE Chief Ramamurthy Opposes Unified Trading Day, Suggests NPCI-Like Cap To Curb Market Concentration

BSE Ltd.’s Managing Director and Chief Executive Officer Sundararaman Ramamurthy opposed unified expiry dates for derivatives contracts, arguing that they could harm competition and increase market concentration. He pointed to NPCI’s 30% cap on UPI third-party providers as a model to curb concentration risks in the stock market.

The product differentiation through factors like underlying assets and expiry days is crucial for fostering liquidity and competition, Ramamurthy told NDTV in a televised interview, recounting how, in the past, all major derivatives contracts, including Nifty and Bank Nifty, expired on Thursdays.

Despite BSE investing heavily in liquidity enhancement and technology schemes, its products struggled to gain traction.

BSE later moved Sensex expiry to Fridays, aligning with market consensus. However, concerns over concentration risk led to another shift, and BSE eventually settled on Tuesday expiries after NSE retained Thursdays.

Ramamurthy said a unified expiry date benefits dominant exchanges but stifles competition and increases systemic risk.

He argued that spreading expiry days across the week allows traders to hedge risks by adjusting positions without resorting to costly longer-term contracts. He warned that a single expiry day could increase market stress, volatility, and liquidity crunches. Apart from this, he also suggested following a level-playing model like the US for trading in the derivatives segment.

Earlier this week, NSE changed the expiry day for its futures and options contracts to Monday, sparking discussions on its impact on BSE’s market share in options trading and revenue.