Weekly Nifty Bank F&O contracts will expire on Wednesdays from Sept

The National Stock Exchange (NSE) plans to shift the expiry days for the NSE Nifty Bank derivatives contracts to Wednesdays instead of Thursdays. The change will become effective on September 4, the exchange said in a circular on Thursday.

However, all existing weekly contracts with Thursday as the day of expiry will be revised to Wednesday on and from September 1.

The first Wednesday weekly expiry will be on September 6, the exchange further notified.

An earlier move by the country’s largest exchange to move the expiry of the Nifty Bank derivatives contracts to Friday was thwarted by rival BSE.

BSE uses Friday as the day of expiry for the relaunched Sensex and Bankex derivatives.

“Considering the need for balanced market development and the avoidance of concentration risk in the market, BSE has requested NSE to consider shifting the Nifty Bank expiry to any day other than Friday. This will help in growing these complementing Sensex and Bankex derivatives and thus derisk the market,” the NSE and BSE said in a joint statement on June 27.

With the Nifty Bank contracts using Wednesday as the day of expiry, there will be derivatives contracts expiring four days a week.

The NSE’s Nifty Financial Services (FinNifty) futures and options (F&O) contracts expire on Tuesday; the Nifty Bank will expire on Wednesday; the Nifty itself on Thursday; and the S&P BSE Sensex and Bankex on Friday.

Market players said the move to stagger expiry days through the week would give trading activity a leg-up. Traders tend to get more active on expiry days as there are higher chances of volatility and wild price swings.

“The move will benefit the market ecosystem — exchanges, brokers, and trades — as activity levels will go up,” says Sneha Seth, senior analyst, technical and derivatives, Angle One. “However, it may lead to confusion among retail participants,” adds Seth.

The NSE’s latest move comes at a time when the BSE is trying to challenge its dominance in the derivatives space.

On Friday, the BSE’s Sensex derivatives clocked a turnover of a record Rs 13.6 trillion. It is still a fraction of the over Rs 250 trillion average daily turnover seen in the NSE derivatives segment.

However, the BSE — which is waiving fees initially — is seen encouraging growth in volumes and threatening to break the NSE’s hitherto monopoly in the lucrative F&O segment.

Capital markets regulator Securities and Exchange Board of India, too, is looking to have a more “level playing field” in the stock exchange space to reduce concentration risk and safeguard the market ecosystem from cybersecurity risks and technology failures.

Nudging the NSE to roll back its decision on moving the Nifty Bank’s expiry to Friday was one such move to level the field, and the regulator has said about half a dozen more initiatives are lined up.