NSE chooses Nifty Bank over Nifty for weekly option contracts. These 2 benchmarks are also about to go

The National Stock Exchange (NSE) has retained the Nifty weekly options contract, barring Nifty Bank, Nifty Midcap Select and Nifty Financial Services, in line with SEBI’s circular, which mandates exchanges to offer derivatives contracts for only one of its benchmark indices. From November 20, 2024.

While Bank Nifty’s weekly option contracts will trade for the last time on November 13, Nifty Midcap Select and Nifty Financial Services will also have their last trading days on November 18 and November 19 respectively, according to an NSE circular issued on Thursday.

No new weekly index option contracts will be generated with an expiry date after the last expiry date for the relevant index as stated above.

Earlier, BSE had announced that it will close weekly contracts of both Sensex 50 and Bankex from November 14, following an order from market regulator Sebi. This means that the BSE Sensex, its index of 30 bluechip stocks, will maintain a derivative weekly contract.

As of now, BSE is running two weekly derivative contracts – Sensex and Bankex. Sensex was chosen over Bankex as the former has larger volumes.

“Weekly index derivatives contracts on Banex will be discontinued with effect from November 18, 2024 at the end of the day. No new weekly contracts will be generated after the expiry of existing unexpired contracts. Existing unexpired contracts will continue till their respective expiry,” BSE said. In a circular. Similarly, it has also closed Sensex 50 contracts.

Notional turnover for BSE’s index options in August was Rs. 2,603 ​​lakh crore. According to exchange data, the Sensex contributed 85% of the volume in the fiscal year ended March 2024.

Under SEBI’s new rules, which come into effect from November 20 in a graded manner, only 2 indices – one BSE and the other NSE – will have weekly closings. All other indices will have only monthly expiration.

This is being done to reduce concentrated hyperactivity in derivatives on expiry date. Currently, Dalal Street has one options contract expiring every trading day.

“With the reduction in the number of closing days in a week to 2 (against 5 at present) and the reduction in the number of products, it may induce a change in trading behavior for both individual and institutional participants. The spillover of trading activity (if any) from discontinued products to continuing products at a premium The overall systemic impact can be minimized,” Jefferies said.