NSE Alters Nifty Expiry Day to Monday for Index and Stock Derivatives

The National Stock Exchange of India (NSE) has announced a significant change in the expiry day of index and stock derivatives contracts. This revision, set to take effect from April 04, 2025, aims to streamline trading operations and enhance market efficiency. Understanding these changes is crucial for traders and investors actively participating in the Futures & Options (F&O) segment.

Key Changes in Expiry Days

NSE has modified the expiry schedule for several derivatives contracts.

• NIFTY Weekly Contracts will now expire on Monday instead of Thursday.
  
• NIFTY Monthly, Quarterly, and Half-Yearly Contracts will also shift from the last Thursday to the last Monday of the expiry month.
  
• BANKNIFTY Monthly & Quarterly Contracts and FINNIFTY, MIDCPNIFTY, and NIFTYNXT50 Monthly Contracts will expire on Monday.
  
• All Stock Monthly Contracts will also move to Monday from Thursday.
  

These changes impact all existing contracts extending beyond April 03, 2025, and any new contracts created from April 04, 2025.

The Logic Behind NSE’s Expiry Shift

The shift to Monday expiries benefits the derivatives market in multiple ways. It aligns with global trading practices and helps reduce disruptions caused by weekly holidays. Managing open positions also becomes easier at the start of the week, leading to improved liquidity. Another advantage is the reduced risk of overlapping with major domestic and global events, which typically take place later in the week. Moreover, traders and institutional investors gain extra time during the weekend to assess market movements and fine-tune their strategies, ultimately enhancing their risk management.

When Should Traders Expect the Change?

The final expiry under the current schedule will be on Thursday, April 03, 2025. Starting on April 04, 2025, all newly created contracts will follow the revised Monday expiry schedule. An updated contract file reflecting these changes will be available by the end of the day (EOD) on April 03, 2025.

How Should Traders and Investors Prepare?

Active traders in the F&O market must adjust their trading strategies to align with the new expiry schedule. Since weekly and monthly expiries will now fall on Mondays, risk management and hedging strategies need to be adjusted accordingly. Traders should also update their trading calendars to ensure they do not miss crucial deadlines.

Additionally, the Clearing Corporations will release revised settlement schedules, so traders must stay informed about changes in fund settlements and margin requirements. Another essential factor to consider is weekend market developments, which could lead to increased volatility on Monday mornings. It is advisable that traders incorporate structured weekend risk assessment into their strategy.

Potential Impact on the Market

The change in expiry days may initially bring adjustments in trading volumes and pricing behavior. Short-term volatility is expected, as traders adapt to the new schedule. However, in the long-term, the revised expiry structure is likely to create a more streamlined/efficient trading environment.

Moreover, institutional investors and proprietary traders may benefit from reduced market overlaps with key macroeconomic events. This will allow for more strategic positioning in derivatives contracts, improving overall market efficiency and liquidity.

Final Thoughts

The NSE’s decision to revise expiry days for index and stock derivatives is a strategic move to optimise trading efficiency and risk management. With expiring moving to Mondays, traders and investors should focus on adapting their trading calendars, reassessing volatility patterns, and staying updated on settlement processes. As always, staying informed and adaptable will be key to making the most of these changes in the trading landscape.

Source: [SEBI Circular](C:\Users\shupal2\AppData\Local\Microsoft\Olk\Others\Futures and Options_Circular_04_03_2025.pdf)