The National Stock Exchange (NSE) of India will implement changes to its weekly derivatives offerings from November 20, 2024, in response to new regulations by the Securities and Exchange Board of India (SEBI). Under these rules, NSE will continue offering weekly derivative contracts only for the Nifty 50 index, while discontinuing weekly options for indices like Bank Nifty, Nifty Financial Services, and Nifty Mid-Cap. This move follows SEBI’s directive to limit weekly options to just one per exchange, aiming to mitigate risks associated with a sharp rise in retail participation in options trading.
The changes come amid concerns that a large number of retail investors are engaging in speculative trading without fully understanding the risks, leading to significant financial losses. SEBI’s data revealed that between 2021 and 2024, individual traders experienced cumulative losses of ₹1.81 trillion in the derivatives market, with only about 7% of traders making consistent profits. The new rules are designed to promote a more balanced market by reducing over-speculation and encouraging more informed trading practices.
In line with NSE’s adjustments, the Bombay Stock Exchange (BSE) will also modify its derivatives offerings, retaining weekly options only for its benchmark Sensex index. The decision to reduce the range of weekly derivatives is intended to protect retail investors from excessive exposure to market volatility, ensuring that only the most liquid and stable products remain accessible for weekly trading. These changes reflect the broader effort by SEBI to make the Indian stock markets more resilient and less prone to speculative risks.
By focusing on a single index for weekly options, both NSE and BSE aim to create a safer and more predictable trading environment, making it easier for investors to manage their risks effectively. This initiative underscores the regulator’s commitment to safeguarding market stability and investor interests.
