ANMI urges SEBI to restore weekly Bank Nifty; seeks investor education, suitability norms

The letter further stated, “Capability building and sound knowledge base of market participants should be considered and participation can be restricted based on eligibility criteria”.

The industry body, representing members of stock exchanges across India, argued that the priority for markets should be a long-term investor education architecture rather than reducing the number of weekly expiries. The submission follows recent comments from the SEBI Chairman, where he indicated that the current certainty is that weekly F&O remains.

The ANMI said that restoring Bank Nifty contracts is critical because product elimination affects market efficiency, liquidity, institutional portfolio strategy construction and the ability of brokers and traders to hedge, while doing nothing to solve behaviour-driven retail losses.

The letter also stressed that "Product structure, such as varying the expiry days of contracts like Nifty 50, Sensex, or sectoral indices like Nifty Bank, need not be tinkered to reduce retail-investor losses”.

The association referenced SEBI’s own study that most individual derivatives traders continue to incur losses. However, it emphasised that losses accelerated not because the product design inherently creates harm, but because knowledge lag and poor risk awareness scale faster than participation.

According to SEBI’s analysis for FY25, 91 percent of individual traders incurred net losses and aggregate losses expanded 41 percent year-on-year to Rs 1.05 lakh crore. Yet despite the scale, investor education programmes have historically reached less than 1 percent of respondents. Surveys show that two-thirds of investors have low literacy on basic market concepts, even though they actively trade.

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The ANMI said, globally, investor education and eligibility criteria are used to reduce retail losses. Regulation can build guardrails, but only knowledge builds resilience. The SEBI survey clearly shows that awareness without understanding leads to poor decisions, and that is where we can focus. It also shows that nearly two-thirds of investors have low market knowledge.

ANMI compared trading with driving; vehicles are not banned because untrained drivers may crash; instead, training and licensing systems ensure safe usage. Trading Academies, it said, can replicate this approach for markets if formally recognised and licensed like Research Analysts and Investment Advisers.

It urged SEBI to create a new Trading Academy regulatory category with clear minimum standards, multilingual delivery, tiered programmes, continuous assessments, and eligibility-linked participation rights. This architecture, it is argued, can scale financial literacy in a way that directly lowers retail losses by compounding competency rather than compressing market structure.

The association also highlighted that the broking industry business model is already under pressure. Float income has eroded due to upstream and downstream rules, volume discounts ended from October 1, 2024, and execution charges have compressed to near-zero with the rise of low-cost digital brokerage.

Removal of high-velocity trading products like Bank Nifty in such an environment, it said, amplifies revenue contraction, increases fragility for intermediaries and shrinks the capability to invest in the very investor education infrastructure that is now required.

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The NSE discontinued the weekly expiry of Bank Nifty from November 13, 2024, while BSE halted Bankex weekly expiry from November 18, 2024, in compliance with SEBI’s October 10 circular.

Through the circular, SEBI had asked exchanges to stop these expiries as there was excessive speculation activity in these indices, especially on expiry days, and a possible risk for market stability.