Focus Keyword: SEBI expiry rule 2025
Meta Description: SEBI mandates stock exchanges to choose either Tuesday or Thursday for equity derivatives expiry to reduce volatility and improve market stability.
Introduction
In a strategic move to bring consistency and stability to the Indian stock market, the Securities and Exchange Board of India (SEBI) has directed all stock exchanges to standardize the expiry day for equity derivatives. As per SEBI’s latest directive issued on May 26, 2025, exchanges must now choose either Tuesday or Thursday as the single expiry day for all equity derivatives contracts, including futures and options.
This change is seen as a proactive step to curb excessive volatility and avoid fragmentation in the market caused by multiple expiry schedules across exchanges.
Why SEBI Took This Step
The Reason Behind the Change
- The move aims to reduce market instability observed on expiry days.
- By having one standard expiry day, SEBI intends to simplify trading and improve risk management for participants.
- Previously, the NSE followed Thursday expiries, while BSE shifted to Tuesday, creating a fragmented structure.
Impact on Volatility
- Multiple expiries caused overlapping volumes, sudden market swings, and confusion among retail traders.
- Standardization is expected to streamline market activity and enhance price discovery.
What It Means for Traders and Investors
For Exchanges
- Each exchange must now select either Tuesday or Thursday as its uniform expiry day.
- It applies to all equity derivative contracts listed on their platform.
For Traders
- Better planning of positions and strategies as expiry dates become more predictable.
- Reduced uncertainty around liquidity and volumes during overlapping expiry days.
For Institutional Participants
- More structured risk management and position rollover planning.
Industry Reaction
Mixed Sentiment
- Many traders welcome this as a long-overdue reform.
- Some brokers and high-frequency trading firms believe it might impact liquidity for exchanges that give up their preferred expiry day.
Expert Opinion
- Rajesh Palviya, Head of Derivatives Research at Axis Securities, mentioned that this move will influence overall market flow and trading strategy planning, especially for weekly options.
Implementation Timeline
- Exchanges are expected to make the switch soon, after choosing their preferred expiry day.
- A transition period will be given to align all contracts.
- This change may also impact the launch dates of new derivative products, which will need to follow the unified expiry rule.
Final Thoughts
SEBI’s directive to unify equity derivatives expiry days reflects its ongoing commitment to investor protection, transparency, and market efficiency. While traders may need to adjust their routines, the long-term benefits of this reform could lead to a more stable, efficient, and predictable derivatives market.
Market participants are now eagerly watching which expiry day the major exchanges will finalize. Until then, preparation and adaptability will be key.
Credit: This blog post is based on information originally reported by The Economic Times.