In an effort to boost derivative trading in Sensex and Bankex indices, which have been overshadowed by broader Nifty and Nifty Bank, BSE recently tweaked the lot size and expiry day of the F&O contracts.
A derivative contract is a financial instrument whose value is derived from an underlying asset. The price of an equity derivative contract, for example, moves in tandem with the underlying stock or equity index.
With effect from May 15, 2023 the lot size for futures and options contracts of Sensex has been reduced to 10 from 15. In the case of the Bankex index, the lot size has been cut to 15 instead of the 20.
BSE also shifted the expiry day for monthly, weekly, and long-dated futures and options contracts to Friday from Thursday. If the expiry day falls on a trading holiday, the expiry day will be the previous trading day.
Compared to BSE, the lot size for BSE's rival, the National Stock Exchange (NSE)-run Nifty and Nifty Bank is much bigger at 50 and 25, respectively. Derivative contracts of both Nifty50 and Bank Nifty expire on Thursday.
NSE on Friday announced reduction in Bank Nifty lot size to 15 from the existing size of 25, which will come into effect from July 2023 monthly expiry.
Sensex30 derivatives are similar yet different to Nifty50, BSE MD and CEO Sundararaman Ramamurthy said, adding, “When you have two different but similar products, there could be interplay between the products, and trading strategies evolve, helping the marketplace grow."
Last week, NSE changed the expiry day of its Nifty Midcap Select index to Wednesday every week against Tuesday earlier. It has also decided to discontinue trading in futures of the Midcap Select index from April 25.
In the Finance Bill 2023, the securities transaction tax on options has been increased to 0.0625 per cent from 0.05 per cent. Traders in the options segment will now have to pay STT of Rs 6,250 on Rs 1 crore of turnover against the earlier levy of Rs 5,000.