On Tuesday, the National Stock Exchange (NSE) announced that it has decided to postpone the expiry of Bank Nifty futures and options (F&O) contracts from Thursday to Friday, effective July 7.
First Friday will expire on July 14, 2023, and all existing contracts on July 7 will be modified to the new cycle. Likewise, the monthly expiry date for Bank Nifty F&O will be moved to the last Friday of the contract month.
However, no changes have been made to the Nifty50 F&O contract. Market experts believe there will be some mismatch as Nifty and Bank Nifty derivatives expire on different dates.
“While the Bank Nifty is a thematic index and the Nifty is a broad-based index, and while the two differ in terms of volatility and price range, they are often traded together, each taking cues from the other, especially It’s during maturity volatility,” said Anand James, chief market strategist at Geojit Financial Services. “However, this link may weaken once the due dates differ.”
The exchange said the decision was made based on market feedback. The NSE’s decision follows changes made by its rival, the BSE.
On May 15, the BSE restarted its derivatives contracts on Sensex and Bankex, adopting a new Friday expiry cycle from Thursday. It reduced the lot size of the two indices to increase the number of volumes on its platform. The exchange has reduced the lot size on Bankex from 20 to 15.
The BSE said Friday’s expiry would offer market participants various trading opportunities and strategies.
The BSE F&O contract, which expired on Friday, was popular with traders for its lower fees compared with the NSE, experts said.
The BSE declined to comment on any imminent impact on the recently revived trading volumes due to the NSE revision.
The NSE has a majority share in the derivatives space, while the BSE has been trying to increase its turnover. Bank Nifty had a notional volume of Rs 274 trillion in the last week of expiry, June 1.
In the latest weekly expiry, the BSE reported a turnover of Rs 69,422 crore on its relaunched derivatives contracts, a four-fold increase from the previous week.
