Sebi Sets New Framework for Equity Derivatives Expiry Days

Sebi announced that all equity derivatives contracts on exchanges will now have expiries limited to Tuesdays or Thursdays to optimize spacing and mitigate risks. Exchanges need Sebi's approval for any changes in expiry scheduling, with proposals due by June 15.

The Securities and Exchange Board of India (Sebi) has announced new regulations concerning the expiry days for equity derivatives contracts. Under the new framework, expiries will be uniformly limited to Tuesdays or Thursdays, aiming to optimize the spacing between expiries and reduce risks associated with clustered expiries at the start or end of the trading week.

According to a Sebi circular, the new guidelines are designed to minimize concentration risks and provide stock exchanges with an opportunity for product differentiation. The regulator underscored that while multiple expiry days can enhance market operations, they also have the potential to increase volatility and jeopardize investor protection.

In response to these changes, exchanges are required to submit their detailed proposals to Sebi by June 15. This move comes following a consultation earlier this year and affects the planned shift by the National Stock Exchange (NSE) to change the expiry day for all index and stock derivatives, which has now been postponed.

(With inputs from agencies.)