SEBI proposes limiting derivative contracts expiry to Tuesdays and Thursdays

The Securities and Exchange Board of India (SEBI) has put forth a regulatory amendment suggesting that weekly and monthly expiries for index and single-stock derivatives contracts should be limited to Tuesdays or Thursdays. This approach aims to provide investors with more predictability and uphold the integrity of the market. 

By concentrating the expiry of contracts on these two specific days, SEBI aims to simplify the operations for market participants and potentially enhance market efficiency by reducing the number of days derivatives expire across the week.

Currently, derivatives contracts in India expire on multiple days, which can result in operational challenges and complexities for brokers and traders. By suggesting a fixed schedule, SEBI intends to alleviate some of the unpredictability associated with contract expirations. The new proposal is seen as an effort to bring about greater coherence and structure in trading practices, which could benefit both institutional and retail investors by offering a more organised trading environment.

In India, the derivatives market plays a crucial role in the financial sector, and SEBI’s regulatory measures are often aimed at safeguarding the interests of investors while ensuring the market's smooth functioning. While the proposal is still under consideration, it reflects SEBI's ongoing dedication to reforming market processes in a manner that could contribute to long-term growth and stability.

The proposal is also indicative of SEBI's proactive approach to evolve market infrastructure, which is essential given the dynamic nature of financial markets. Although the details of the implementation process are yet to be finalised, SEBI's decision to consider such a change highlights the regulator's intent to modernise trading operations. Market participants, including traders and brokers, are expected to review and adapt to these proposed changes if they are to be implemented.

The initiative comes at a time when the derivatives market in India is experiencing significant activity. While the proposal is still in the initial stages, SEBI will likely seek feedback from various stakeholders to gauge the potential impact of this change. The consultation process will be crucial in determining how these changes could be best implemented to optimise the trading framework and maintain market integrity.