NSE Discontinues Weekly Derivatives Contracts: What About Monthly Expiry?
In a recent announcement, the National Stock Exchange of India (NSE) made significant changes regarding the availability of weekly derivatives contracts for key indices. As per the circular issued on October 10, 2024, the weekly contracts for Bank Nifty (BANKNIFTY), Nifty Midcap Select (MIDCPNIFTY), and Nifty Financial Services (FINNIFTY) will be discontinued, effective from November 20, 2024. This has raised concerns among traders and investors regarding the status of the monthly expiry contracts for these indices.
What the Circular Says
The NSE circular clarifies that as part of a regulatory directive from SEBI (Securities and Exchange Board of India), exchanges can offer weekly derivatives contracts on only one benchmark index. Following this guideline, NSE will continue to provide weekly options contracts exclusively for the Nifty 50 Index (NIFTY).
The last weekly expiry dates for the affected indices have been announced:
- Bank Nifty: Last weekly expiry on November 13, 2024.
- Midcap Nifty: Last weekly expiry on November 18, 2024.
- Financial Services Nifty: Last weekly expiry on November 19, 2024.
After these dates, no new weekly options contracts will be generated for these indices.
Read the official notification here
The Impact on Monthly Expiry Contracts
While the circular specifically addresses the discontinuation of weekly contracts, there is no mention of changes to the monthly expiry contracts. This suggests that the monthly options and futures contracts for Bank Nifty, Midcap Nifty, and Financial Services Nifty will continue to be available as usual.
The focus of the circular is to streamline weekly contract offerings to a single index per exchange, but it doesn’t impact the broader monthly derivatives market. Therefore, traders and investors can expect the monthly expiry contracts for these indices to remain unaffected.
What This Means for Traders
The discontinuation of weekly contracts on multiple indices might shift trading activity towards the Nifty 50 weekly options. However, for those who rely on the monthly expiry for strategies in Bank Nifty, Finnifty, and Midcap Nifty, these contracts are likely to remain available, ensuring continuity for long-term traders.
The decision aligns with SEBI’s aim to enhance investor protection and market stability, but it could also influence liquidity patterns in these indices as traders adapt to the new structure.
For now, the focus is on the weekly options, and monthly contracts should remain a part of the trading landscape for these popular indices.
Also Read – What is an Index in the Stock Market? – Explained in Simple Words
Conclusion
In summary, while the weekly derivatives contracts for Bank Nifty, Finnifty, and Midcap Nifty are set to be discontinued from November 2024, there is no indication that monthly expiry contracts will be affected. Traders can continue using monthly options and futures for their trading strategies in these indices. As always, staying informed about regulatory changes and adapting to market shifts is crucial for maintaining a competitive edge in the derivatives market.
Disclaimer: This information is for educational purposes only and does not constitute financial advice. Always conduct your own research and consult with financial professionals before making investment decisions.