BSE to discontinue weekly index derivatives contracts on SENSEX 50 and BANKEX

BSE

The BSE said on October 3 that weekly index derivatives contracts on SENSEX 50 will be discontinued from Nov 14, and weekly index derivatives contracts on BANKEX will be discontinued from November 18. This comes following SEBI’s recent guidelines on strengthening equity index derivatives framework for increased investor protection and market stability.

For the decision on SENSEX 50, New weekly contracts will not be generated after the expiry of existing unexpired contracts, and existing unexpired contracts will continue till their respective expiry, the BSE said in a notification.

For BANKEX, new weekly contracts will not be generated after the expiry of existing unexpired contracts, said BSE. Existing unexpired contracts will continue till their respective expiry.

On October 1, market regulator Sebi announced a slew of measures to strengthen index derivative framework to protect investors and improve market stability, including reducing expiries to a weekly basis. Each exchange will be allowed to provide derivatives contracts for only one of its benchmark index with weekly expiry.

The regulator has rolled out these measures after taking into consideration the highly speculative nature of trading on index derivatives, particularly on expiry day of the contracts.

The Securities and Exchange Board of India (Sebi) has also increased the minimum trading amount for derivatives from the present Rs 5-10 lakhs to Rs 15 lakh when it is introduced in the market, which will then be increased fall between Rs 15 lakh and Rs 20 lakh. As the press release by the market regulator said, "the lot size shall be fixed in such a manner that the contract value of the derivative on the day of review is within Rs. 15 lakhs to Rs. 20 lakhs."