Sebi limits expiry of derivatives contracts to Tuesdays or Thursdays

Mumbai: The Securities and Exchange Board of India (Sebi) on Monday said expiries of all equity derivatives contracts will be limited to two days a week, either Tuesdays or Thursdays.

"In the multi exchange framework, spacing out of expiry days through the week reduces concentration risk and provides an opportunity to stock exchanges to offer product differentiation to market participants," Sebi said in a circular.

"At the same time, too many expiry days has the potential to revive expiry day hyperactivity, which could jeopardise investor protection and market stability," it said.

The regulator said, every exchange will continue to be allowed one weekly benchmark index options contract on their chosen day - Tuesday or Thursday.

Besides benchmark index options contracts, all other equity derivatives contracts, viz., all benchmark index futures contracts, non-benchmark index futures and options contracts, and all single stock futures and options contracts will be offered with a minimum tenor of one month, and the expiry will be in the last week of every month on their chosen day, that is last Tuesday or the last Thursday of the month, Sebi said.

Stock exchanges will now have to seek prior approval from the regulator for modifying the settlement day of their derivatives contracts from the one which has been existing. Under the current framework, stock exchanges could decide upon the expiry day of their derivatives products.

Sebi has asked exchanges to submit their proposal by June 15.