Stock exchanges have proposed to market regulator SEBI for moving F&O contracts on monthly basis, reported CNBC-Awaaz on August 21 citing sources.
Exchanges are of the view that weekly expiry is not serving long term hedging purpose, the channel reported.
Weekly expiry is prone to manipulation while retail investors are suffering, sources told CNBC-Awaaz.
On August 21, BSE shares fell up to 7.5% while those of Angel One declined 6.4%.
Shares of other capital market stocks like MCX and Motilal Oswal Financial Services fell 3.6% and 1.4%, respectively.
The Nifty Capital Markets index closed trading 2% lower at 4,424.
SEBI Chairman Tuhin Kanta Pandey's comment about consulting with industry on longer-term F&O products has also put pressure on the capital markets stocks on August 21.
The chief of the capital market watchdog, however, clarified that it is currently only a "thought process" and industry consultation would be done before taking any decision.
"Improving the tenure (of the F&O contract) really means whether we can have more longer-term derivatives, but all this is to be done in consultation like in what form," said Pandey on the sidelines of a capital market conference organised by industry body FICCI.
"We will have the consultations. We have to see it qualitatively, but we have to (do it) in a calibrated manner. It is a thought process (as of now)," added Pandey.
The equity derivatives arena has been in the limelight in the recent past with the regulatory body taking various steps to curb the quantum of trading. For instance, SEBI has allowed only one weekly contract per exchange while also fixing the contract expiry days.
Earlier in the day, while delivering his speech at the FICCI event, Pandey highlighted the fact that one needs to ensure quality and balance in the F&O segment.
"Equity derivatives play an important role in capital formation but we must ensure quality and balance. We will consult with stakeholders on ways to improve in a calibrated manner the tenor and maturity profile of derivative products so they better serve hedging and long-term investing," said Pandey.
SEBI's approach in relation to equity derivatives have been thoughtful and consultative, he added.
On a different note, the SEBI chief also said that the regulatory body is looking at ways to deepen the cash market as that is where capital formation happens.
"We are looking to deepen the cash equities market... volumes in the cash markets have grown rapidly, doubling in terms of daily trading volumes over a period of just three years. However, much more needs to be done," said Pandey.
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