Understanding the changes in Bank Nifty Futures & Options weekly expiry day – now on Wednesday’s

On July 12, 2023, the National Stock Exchange (NSE) vide circular no. 119/2023 announced that w.e.f. 4th September 2023, the Weekly expiry day of Bank Nifty derivatives contracts shall stand revised to Wednesday instead of Thursday.

Details of the changes

1. Weekly expiry of BANKNIFTY index options contracts has changed from existing THURSDAY to WEDNESDAY.

2. The above shall be effective from trade date September 04, 2023 Monday and accordingly, all existing weekly contracts with Thursday expiry will be revised to Wednesday on September 01, 2023 EOD.

3. The first WEDNESDAY weekly expiry will be on September 06, 2023.

4. The below are the changes in the expiry day of derivatives contract on BANKNIFTY

Implications on existing positions

At EOD of September 01, 2023, the expiry date and maturity date for all existing weekly options contracts will be revised/preponed to Wednesday as mentioned in the aforesaid table

Any new weekly contract created for trading on / after EOD of September 01, 2023 shall be created as per the revised expiry days as mentioned in the aforesaid table.

BANKNIFTY will continue to have 4 weekly expiration contracts (excluding monthly contracts), 3 monthly expiration contracts and 3 quarterly expiries (March, June, Sept & Dec cycle).

Reasons for the change

Much like any other financial exchange, NSE periodically reviews and updates its policies and procedures to ensure the smooth functioning of the market and to address the evolving needs of market participants.

There may be several reasons behind the change according to us, including:

• Market efficiency: By aligning the expiry days of different contracts such as Nifty, Bank Nifty, Nifty Financial or Nifty Midcap contracts, the aim might be to reduce complexity and streamline trading operations. This can facilitate better price discovery and improve overall market liquidity
• Harmonization of multiple contract cycles: This change can benefit traders who engage in multiple indices or in cross index hedging
• Risk Management: One of the primary roles is to safeguard market integrity and stability. Changing the expiry day can help mitigate risks associated with market manipulation or undue concentration of positions. By spreading out the expiry days across the week, the possibility of excessive volatility may also be addressed
• Feedback from market participants: The exchange may also consider a strong demand or consensus from valued participants such as traders, institutional investors or brokers and make adjustments accordingly

The contract expiries which will be available in BANKNIFTY index options on trading date of September 4, 2023 are given below

For more details, kindly click here to read the circular issued by the National Stock Exchange (NSE).

Disclaimer: ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. ( Member Code : 56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Ms. Mamta Shetty, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The client shall not have any claim against I-Sec and/or its employees on account of any suspension, interruption, non-availability or malfunctioning of I-Sec system or service or non-execution of algo orders due to any link/system failure for any reason beyond I-Sec control. I-Sec reserves the right to pause, stop or call back any of the execution algos in case of any technical or mechanical exigency.