NSE likely to put the change in expiry day on hold

SEBI has proposed that exchanges can choose either Tuesday or Thursday as expiry days.

NSE's plan to shift its derivatives expiry day to Monday from Thursday may be put on hold as SEBI has advised exchanges not to tweak the schedule until a new policy kicks in.

On Thursday, SEBI floated a consultation paper proposing that the expiry day could be on Tuesday or Thursday. NSE had earlier proposed to shift its expiry to Monday from Thursday, with the change kicking in from April 4.

"SEBI, in a letter to exchanges, has advised not to proceed with the plans to change expiry day and maintain status quo for now," said a source.

The sources cited further added that NSE may soon issue a circular announcing that it was maintaining the status quo.

NSE had also announced that it would shift the F&O expiry for Bank Nifty, FinNifty, Nifty Midcap Select and Nifty Next50 to the last Monday of the expiry month from Thursday currently.

"Exchanges were changing expiries as per their own convenience without considering that it creates confusion for participants; hence a stable policy was required," said the source quoted earlier.

The SEBI consultation paper has also proposed that exchanges will now have to seek prior approval of the regulator for launching or modifying any contract expiry or settlement day.

SEBI has proposed that exchanges can choose either Tuesday or Thursday as expiry days.

"The two major exchanges in equity derivatives (i.e. BSE and NSE) have chosen Tuesday and Thursday, respectively, as the expiry days for derivatives contracts on single stocks and indices. One of the exchanges (NSE) has now proposed to change the final settlement day to Monday," stated the SEBI consultation paper issued on Thursday.

"As long as there are two prominent exchanges, they can choose any of the two days. In future, there can be a scenario where two exchanges can have the same expiry days, like if MSEI comes, then it has to choose either Tuesday or Thursday". explained a source.

"Expiries of all equity derivatives contracts of an exchange will be uniformly limited to one of either Tuesdays or Thursdays. This would provide optimal spacing between expiries across exchanges while avoiding choice of either the first day of the week or the last day as an expiry day," as per the consultation paper.

An email query sent to NSE remained unanswered till the time of publishing this story.