NSE CANCELS PLAN TO SHIFT NIFTY BANK F&O EXPIRY TO FRIDAY

On Tuesday, 27^th of June, 2023,  the National Stock Exchange (NSE) withdrew its plan to shift the expiry of Nifty Bank derivative contracts from Thursday to Friday.

Earlier this month, the NSE had decided to move the expiry of Nifty Bank derivative contracts from Thursday to Friday from mid-July. The first Friday expiry was to be on July 14, 2023. The move was done after BSE shifted the expiry day of Sensex and Bankex indices to Friday with effect from May 12.

This was done after the success of Nifty Financial Services index based derivatives which are seeing high volumes on their Tuesday expiry days. NSE wanted to replicate this success: since both Nifty and BankNifty contracts expire on the same day, traders had to pick one or distribute their capital across these two. With BankNifty expiring on a separate day of the week as Nifty, expiry day traders would’ve been able to focus on one underlying at a time, thus increasing not only their trading, but also exchange volumes.

But NSE’s move would have impacted BSE’s recently launched weekly options contracts in the Sensex and Bankex contracts, which have a Friday expiry.

Considering the need for "balanced market development and avoidance of concentration risk in the market", BSE has requested NSE to consider shifting of the Bank Nifty expiry to any day other than Friday.

"The proposed Friday expiry of Bank Nifty coincides with the expiry of the Sensex/ Bankex F&O contracts that were relaunched by BSE with effect from May 15, 2023. BSE, based on market feedback feels that this can potentially impact the growth of Sensex/Bankex derivatives. Considering the need for balanced market development and avoidance of concentration risk in the market, BSE has requested NSE to consider shifting of the Bank Nifty expiry to any day other than Friday. This will help in growing this complementing Sensex/Bankex derivatives and thus de-risk the market," said the stock exchanges in a joint press release.

"Based on this, NSE, in the interest of market development has decided to withdraw the Circular Ref. No: 88/2023 with immediate effect. Members are hereby advised to note the following revision. Any further change will be duly notified by NSE," the exchanges added.

While this retraction does give Sensex and Bankex derivatives to grow, it remains to be seen if NSE will pick a different day of the week for either Nifty or BankNifty expiry.

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