Mumbai, March 4, 2025: The National Stock Exchange of India (NSE) has announced a significant revision in the expiry day of index and stock derivatives contracts. This change, outlined in circular NSE/FAOP/66938 dated March 4, 2025, will come into effect from April 4, 2025. The expiry day for various derivative contracts, including NIFTY, BANKNIFTY, FINNIFTY, MIDCPNIFTY, and stock derivatives, has been shifted from Thursdays to Mondays.
This move is a partial modification of previous NSE circulars and aims to streamline trading activities while minimizing market disruptions.
Key Changes in Derivatives Expiry Days
As per the revised framework, the expiry day for different derivatives contracts has been changed as follows:
|
Derivatives on |
Particulars |
Current Expiry Day |
Revised Expiry Day |
|
Index |
NIFTY weekly contracts |
Thursday of expiry week |
Monday of expiry week |
|
|
NIFTY monthly, quarterly, and half-yearly contracts |
Last Thursday of expiry month |
Last Monday of expiry month |
|
|
BANKNIFTY monthly & quarterly contracts |
Last Thursday of expiry month |
Last Monday of expiry month |
|
|
FINNIFTY, MIDCPNIFTY, and NIFTYNXT50 monthly contracts |
Last Thursday of expiry month |
Last Monday of expiry month |
|
Stocks |
All Monthly contracts |
Last Thursday of expiry month |
Last Monday of expiry month |
Implementation Timeline and Transition Plan
• The new expiry day will be effective from April 4, 2025.
• The last expiry under the old system will be on April 3, 2025 (EOD).
• Any new contracts created for trading on or after April 4, 2025, will follow the revised expiry schedule.
• A revised expiry date for all existing derivative contracts will be reflected in the contract file generated on April 3, 2025.
The NSE has advised members to refer to the Annexure for a detailed illustration of the transition.
Possible Reasons Behind the Change
While NSE has not explicitly stated the rationale behind this shift, market experts believe the change was made after extensive research and deliberation. Some potential reasons could include:
1. Aligning with Global Best Practices: Many international exchanges, such as the New York Stock Exchange (NYSE) and Chicago Mercantile Exchange (CME), follow Monday expiries for certain derivative contracts. NSE may be aligning with global trends to attract more foreign investors.
2. Reducing Market Volatility: Thursdays have historically seen increased volatility due to F&O (Futures & Options) expiries. By shifting expiry dates to Mondays, the NSE might aim to distribute volatility more evenly across the trading week.
3. Improving Liquidity and Trading Efficiency: Moving expiries to Mondays may prevent sudden market disruptions that often happen when major economic events (like RBI policy announcements or US Fed meetings) coincide with expiry days.
4. Better Risk Management for Traders: Monday expiries may allow traders and institutional investors to plan their positions more effectively, especially after analyzing global market movements over the weekend.
Impact on Traders and Market Participants
This change will have several implications for different market participants:
For Retail Traders:
• Those involved in options selling and buying will need to adjust their trading strategies as expiries will no longer happen mid-week.
• The price behavior of contracts near expiry may change due to lower mid-week volatility.
For Institutional Investors & Hedgers:
• Institutions that hedge positions using derivatives will need to recalibrate their risk models and adjust trading algorithms accordingly.
For Brokers & Trading Platforms:
• Technology and trading systems will need updates to reflect the new expiry days.
• Adjustments in margin calculations and risk assessment models will be required.
No Other Changes in Contract Specifications
The NSE has clarified that there are no changes in the fundamental contract specifications for index and stock derivatives apart from the expiry day revision. This ensures that the overall structure and pricing mechanisms of derivatives remain unaffected.
Market Reaction and Next Steps
Market participants have reacted with mixed opinions:
• Some traders believe this will help reduce weekly volatility and smoothen trading flows.
• Others worry about potential liquidity issues as traders adjust to the new system.
NSE has assured that it will monitor the transition closely and take necessary steps to ensure a seamless shift.
With April 2025 fast approaching, traders, investors, and market analysts will now start recalibrating their strategies to align with this new expiry framework.
The NSE’s decision to shift expiry days from Thursdays to Mondays marks a major structural change in the Indian derivatives market. While the full impact of this shift remains to be seen, it is clear that NSE aims to enhance market efficiency, reduce volatility, and align with global trading standards.
Traders and investors must stay informed and adapt their strategies accordingly to navigate this transition successfully.