Sebi proposes to limit the expiry of derivatives to Tuesdays or Thursdays

The market regulator has proposed a limitation of the expiry of derivative contracts until Tuesday or Thursday, which may upset the plan of the National Stock Exchange (NSE) to change the last day of the weekly index option for Monday.

The proposed movement aims to minimize the risk of concentration and enabling differentiation of the product, in accordance with the consultation document published by securities and Exchange Board of India (Sebi) on Thursday. The document aims to formalize the last days of settlement of derivative contracts between stock exchanges and avoid unjustified reshuffle.

“Each stock exchange will continue to be allowed every weekly reference index option on a selected day (Tuesday or Thursday),” said the article.

Currently, after Okólnik, October 1, BSE LTD and NSE appointed, respectively on Tuesdays and Thursdays, as a day of validity of the contract for the options of individual shares and index.

However, after recently, NSE changed the weekly expiry to Monday with the obligation of April 4, Sebi said that too many such days can revive hyperactivity on the day of a mature derivative agreement.

Sebi also explained that exchanges must now turn to the prior consent of the regulatory authority before starting or modifying each day of validity or settlement.

The regulator also proposed that other contracts regarding capital derivatives, including the Futures reference index, Futures/index options other than the waterfront and the options of a single action, will be offered with the minimum tenor of one month. These contracts will expire last week of the month designated on Tuesday or Thursday of the stock exchange.

On March 19, Mint announced that the market regulator may view a controversial proposal to introduce a gross restriction for all index trade clients after receiving feedback with such a rule from several market participants, quoting a person’s knowledge.