Shares of Asia's oldest bourse BSE Ltd. sank over nine percent in the morning session on March 5, after its competitor National Stock Exchange shifted its expiry day for all F&O contracts to Monday.
All Nifty index weekly futures and options (F&O) contracts will expire on Monday instead of Thursday with effect from April 4. All Nifty F&O contracts to expire last Monday of expiry month, not Thursday, said the exchange.
According to an NSE spokesperson, "The rationale of this decision is not based on numbers or what we will gain, this is more to take into account the fact that there are a lot of geopolitical developments over the weekend, and Monday is a great day to have the expiry. Of course we have been getting feedback since yesterday, but we have announced this decision keeping efficiency in mind. We will review if need be."
Further, there’s a chance of increased activity on Friday, as participants may prefer to square off positions rather than hold them over the weekend, as per experts. Further, they suggested that NSE's move is part of its efforts to gain back some of the market share in options market.
As a result, BSE shares cracked nine percent during the session. At 9.45, the shares were quoting Rs 4,163.4 on the NSE, down 6.4 percent, down to a four-month low.
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NSE also shifted F&O expiry for Bank Nifty, FinNifty, Nifty Midcap Select and Nifty Next50 to the last Monday of the expiry month with effective from April 4. "The circular shall come into effect from April 04, 2025 i.e. Expiry day for all existing contracts will be revised to "New Expiry Day" on April 03, 2025 (EOD)," said NSE.
"The regulator has deemed that reducing expiry days will curb speculation, and the effective solution could be one expiry day for all exchanges in a week," said the NSE Chief Business Development Officer Sriram Krishnan in an interview with CNBC-TV18.
He added, "Investor awareness and education is what we have to work on. They need to be well-aware of the downside risks of trading options. It is our responsibility to build this capacity, and limiting expiries is part of that."
Earlier this month, international brokerage Goldman Sachs had cut its target price on shares of Asia's oldest bourse BSE Ltd. as the market regulator Securities and Exchange Board of India (SEBI)'s proposed changes on monitoring risk could reduce activity from proprietary traders.
Goldman Sachs trimmed its target price on BSE shares to Rs 4,880, from Rs 5,650 earlier, while maintaining its neutral rating. The broking house noted that around 70 percent of BSE's average daily turnover comes from proprietary traders. The market regulator has proposed a new way to measure risk investors are exposed to, in a consultation paper issued on February 24.
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