Nifty F&O Expiry Shift To Tuesday A Significant Boost For Hedging: NSE's Sriram Krishnan

Responding to market demand, the NSE has shifted to Tuesday as the expiry day for its equity derivatives contracts—a move that's expected to shake things up in the weekly options market and boost hedging, as per NSE's Chief Business Development Officer Sriram Krishnan.

"This is a huge positive. Market participants have been requesting this for a while," said Krishnan.

Earlier, equity derivatives in India only had monthly expiries. But the move to weekly contracts created a dynamic where the last day of the trading week, that is, Friday, started to see unusually high premiums. With NSE's contracts now expiring on Tuesday, traders can enjoy lower-cost and a more efficient hedging tool just as the week winds down, explained Krishnan.

"If one exchange has expiry on Thursday, its premiums tend to rise by Friday. Since NSE's expiry is now on Tuesday, we will be the cheaper option at the end of the week," Krishnan said. "So, Friday will likely see more activity on NSE contracts." This shift is particularly helpful for market participants who are focused more on efficient cost structures rather than just chasing volume.

"There was never really a focus on the cost of hedging. This changes that," he added.

"We’re not chasing market share. We're responding to what market participants asked for—contracts at a lower and more efficient premium," Krishnan said.

Meanwhile, NSE is also entering new territory with its Electricity Futures product. While still in its early days, Krishnan is bullish. "Power costs are only going up. If someone doesn't hedge power costs, they are hugely worse off. Electricity Futures is an interesting product."

The product ties in well with India’s larger ESG goals, as industries prepare for a more sustainable and cost-aware future, he said.