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The National Stock Exchange (NSE) has revised the expiry dates for several of its index derivative contracts, effective January 1, 2025. This comes a day after the BSE also announced similar changes to its derivative contracts.
FINNIFTY, MIDCPNIFTY, and NIFTYNXT50 will now expire on the last Thursday of the expiry month.
In a significant move, the National Stock Exchange (NSE) has revised the expiry dates for several of its index derivative contracts, effective January 1, 2025. This change was announced in a circular dated November 29, 2024. It comes a day after the BSE made a similar change to its derivative contracts’ expiry dates.
Here’s a breakdown of the key updates and their implications for traders and investors.
Key Changes in Expiry Days
Monthly Contracts:
FINNIFTY, MIDCPNIFTY, and NIFTYNXT50: These contracts will now expire on the last Thursday of the expiry month. Previously, the expiry days for these contracts were spread across the week: Tuesday (FINNIFTY), Monday (MIDCPNIFTY), and Friday (NIFTYNXT50).
Bank Nifty: The monthly and quarterly contracts will also shift to the last Thursday of the expiry month, a change from their earlier expiry on the last Wednesday.
No Changes for Nifty:
The expiry schedule for Nifty’s monthly, weekly, quarterly, and half-yearly contracts remains unchanged.
BSE’s Parallel Move:
The BSE also announced similar changes to its derivative contracts, effective January 1, 2025:
Sensex Weekly Contracts: Will now expire on Tuesday instead of Friday.
Sensex, Bankex, and Sensex 50 Monthly Contracts: Expiry shifts to the last Tuesday of the month.
Quarterly and Semi-Annual Contracts of Sensex: Move from last Friday to last Tuesday of the expiry month.
What Do These Changes Mean for Traders?
Uniform Expiry Days: The new expiry schedule aligns multiple contracts to the last Thursday of the month. This uniformity can simplify trading strategies and reduce confusion over varying expiry dates.
Impact on Liquidity and Volatility: Concentrating expiries on a single day could lead to higher trading volumes and increased liquidity on those specific days. However, it may also result in heightened volatility as traders adjust positions.
Strategic Adjustments: Traders accustomed to managing contracts based on the earlier staggered expiry schedule will need to realign their trading strategies to accommodate the new timeline.
Smoother Settlement Process: The alignment of expiry dates may streamline the settlement process, making it more efficient for both exchanges and participants.
Why the Change?
The revisions are likely aimed at improving market efficiency and reducing operational complexities. By standardising expiry days, the exchanges aim to enhance liquidity and provide a more seamless trading experience.