Capital markets regulator Securities and Exchange Board of India (Sebi) has issued a new circular on Monday, asking the exchanges to choose expiry days for equity derivatives - either Tuesday or Thursday. The directive is aimed at reducing expiry-day volatility and bringing uniformity across exchanges.
Currently, exchanges have the freedom to set expiry days for their derivatives products, which has led to a spread of expiry days throughout the week.
Sebi noted that while this allows exchanges to offer product differentiation and reduce concentration risk, it also increases the chances of heightened market activity on multiple days — which may affect investor safety and market smoothness.
Following consultations and feedback from a March 2025 discussion paper, Sebi's Secondary Market Advisory Committee (SMAC) deliberated on the matter and recommended limiting expiry options to reduce market hyperactivity.
Stock exchanges will now be required to align the final settlement day for equity derivatives contracts — including index options, index futures, and single stock futures and options — to either Tuesday or Thursday.
Each exchange can continue to offer one weekly benchmark index options contract on their chosen day. For all other derivatives, such as benchmark index futures, non-benchmark index options, and single stock contracts, the minimum contract tenor will now be one month, and they must expire on the last Tuesday or last Thursday of the month, depending on the exchange’s selection.
Exchanges will also need Sebi prior approval to make any future changes to their settlement day.
All exchanges must submit their revised expiry plans to Sebi by June 15. They are also required to amend their bye-laws and operational systems accordingly to implement the circular.
The move is expected to streamline trading activity, reduce confusion among participants, and curb speculative spikes around multiple expiry dates — contributing to a more stable and investor-friendly equity derivatives market.
Currently, exchanges have the freedom to set expiry days for their derivatives products, which has led to a spread of expiry days throughout the week.
Sebi noted that while this allows exchanges to offer product differentiation and reduce concentration risk, it also increases the chances of heightened market activity on multiple days — which may affect investor safety and market smoothness.
Following consultations and feedback from a March 2025 discussion paper, Sebi's Secondary Market Advisory Committee (SMAC) deliberated on the matter and recommended limiting expiry options to reduce market hyperactivity.
Stock exchanges will now be required to align the final settlement day for equity derivatives contracts — including index options, index futures, and single stock futures and options — to either Tuesday or Thursday.
Each exchange can continue to offer one weekly benchmark index options contract on their chosen day. For all other derivatives, such as benchmark index futures, non-benchmark index options, and single stock contracts, the minimum contract tenor will now be one month, and they must expire on the last Tuesday or last Thursday of the month, depending on the exchange’s selection.
Exchanges will also need Sebi prior approval to make any future changes to their settlement day.
All exchanges must submit their revised expiry plans to Sebi by June 15. They are also required to amend their bye-laws and operational systems accordingly to implement the circular.
The move is expected to streamline trading activity, reduce confusion among participants, and curb speculative spikes around multiple expiry dates — contributing to a more stable and investor-friendly equity derivatives market.
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