LATEST NSE & BSE LOT SIZE CHANGES FOR INDEX DERIVATIVES

Both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have announced revisions in the market lot sizes of derivative contracts for various indices and stocks. These changes, aligned with SEBI guidelines, aim to ensure contract values remain within an optimal range, facilitating efficient risk management for traders. The new lot sizes for Index Derivatives will take effect from 27^th June, 2025.

NSE Lot Size Revision

The NSE has revised the market lot sizes for two key indices—Nifty Bank (BANKNIFTY) and Nifty Midcap Select (MIDCPNIFTY). The revised lot sizes will be effective from 27^th June, 2025, and all quarterly contracts available for trading from April 25^th, 2025, onwards will reflect these changes.

The following changes have been made to the market lots of index derivatives:

No Changes for Certain Indices

While BANKNIFTY and MIDCPNIFTY are seeing adjustments, the following indices will retain their existing lot sizes:

This means that traders holding positions in NIFTY, FINNIFTY, and NIFTYNXT50 derivatives will not experience any changes in their contract specifications.

BSE Lot Size Revision

The BSE has also revised market lot sizes for derivative contracts on individual stocks and indices, following SEBI guidelines. The following changes have been made to the market lots of index derivatives:

No Changes for Certain Indices

While we see adjustments in BSE SENSEX 50, the following indices will retain their existing lot sizes:

As per Annexure I of BSE circular 20250401-8, traders holding positions in BSE SENSEX and BSE BANKEX derivatives will not experience any changes in their contract specifications.

For May 2025 and subsequent expiries, new lot sizes for stocks in Annexure II will be applicable, while changes for stocks and indices in Annexures III and IV will take effect only from July 2025 onwards.

Implementation Schedule

For NSE Index Derivatives:

·       No change for existing monthly expiries of April, May, and June 2025.

·       All quarterly contracts available for trading will reflect these changes from April 25^th, 2025, onwards.

·       The revised market lot will apply to July 2025 expiries and beyond.

·       Day spread orders will not be available for May-July and June-July 2025 combination contracts.

For BSE Derivative Contracts:

·       The new lot sizes will be implemented from April 11, 2025.

·       May and June 2025 contracts will retain old lot sizes.

·       July 2025 expiries and beyond will have revised lot sizes.

Impact on Traders

·       Hedging & Strategy Adjustments: Traders using spread orders must adapt to the unavailability of certain combinations.

·       Market Liquidity & Efficiency: Ensures better price discovery and risk management.

·       Retail vs Institutional Trading: Larger lot sizes may impact retail traders more significantly.

Historical Context of Lot Size Revisions

Historically, NSE has revised lot sizes multiple times.

·       On January 2, 2025, the lot size for BANKNIFTY increased from 15 to 30, and MIDCPNIFTY increased from 50 to 120.

·       In July 2023, BANKNIFTY’s lot size was reduced from 25 to 15, and MIDCPNIFTY’s from 75 to 50.

·       Previously, in October 2021, the lot size of BANKNIFTY remained at 25 while NIFTY was reduced from 75 to 50.

·       Earlier, in January 2020, NIFTY’s lot size decreased from 75 to 50, and BANKNIFTY increased from 20 to 25.

Similarly, BSE has also made several revisions.

·       In April 2023, multiple stock derivatives had lot size adjustments to align with market norms.

·       In December 2021, the lot size of SENSEX derivatives was reduced from 15 to 10, and BANKEX from 20 to 15.

·       Back in June 2019, BSE also adjusted lot sizes for multiple stocks based on trading activity and contract valuation.

Official References and Circulars

For detailed information, traders and investors can refer to the official NSE circular:

NSE Circular: Revision in Market Lot of Derivative Contracts (Ref. No: NSE/FAOP/67372, Dated March 28, 2025)

BSE Circular: Revision in Market Lot of Derivatives Contracts on Individual stocks & Index (Ref. No: 20250401-8, Dated April 1, 2025.

Final Thoughts

With both NSE and BSE implementing these changes, traders must stay informed and realign their strategies accordingly. Ensuring a smooth transition by understanding the impact on open positions will be crucial for effective risk management. Whether you're a retail trader managing smaller positions or an institutional investor dealing with large volumes, being proactive about these changes can make all the difference in navigating the evolving market landscape.