SEBI Likely To Finalise Proposal On F&O Expiry Day For Exchanges
The Securities and Exchange Board of India is likely to finalise a proposal that would mandate all equity derivative contracts—futures and options—on each exchange to expire only on either Tuesday or Thursday. According to people familiar with the matter, the regulator aims to bring uniformity across exchanges and reduce expiry-day volatility.
Each recognised stock exchange will be allowed one weekly index options contract, which must expire on either Tuesday or Thursday, depending on the exchange's choice. This means an exchange can offer a weekly expiry on either of the two days, but not both.
As per people directly privy to the issue, the regulator also received recommendations from the smaller players among exchanges against the proposal. However, the regulator is likely to finalise, they said.
Aside from weekly benchmark index options, all other equity derivatives—including stock futures and options, non-benchmark index derivatives, and benchmark index futures—will have a minimum one-month tenure and expire in the last week of each month, on the exchange's chosen day (either the last Tuesday or Thursday).
The regulator will also require exchanges to obtain prior approval before launching or modifying any contract's expiry or settlement day going forward.
Meanwhile, as reported previously, the regulator is likely to ease the proposed curbs on trading in Index Options, by introducing a much higher threshold for net and gross position limits, people in the know told NDTV Profit.
SEBI is leaning towards allowing a net end of the day limit of Rs 1,500 crore and a gross limit of Rs 10,000 crore (each side) for Index Options, they hinted. As per the previous proposal of the regulator, the net end-of-day limit was Rs 500 crore, only with a gross limit of Rs 1,500 crore.
The regulator also moves towards a delta-based open interest metric instead of the traditional notional method. This approach accounts for the actual economic exposure of options trades rather than their notional size, which can be misleading.
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