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India’s largest choices contract Nifty Bank could have its final weekly expiry right this moment; What it means for traders and merchants
Nifty Bank could have its final weekly expiry right this moment
India’s largest choices contract Nifty Bank could have its final weekly expiry right this moment as Sebi’s new laws come into drive from subsequent week.
The Securities and Exchange Board of India (SEBI), in a regulatory replace on 10 October 2024, introduced a number of measures to boost investor safety and market stability within the derivatives section. One notable change is the limitation of weekly derivatives contracts to a single index per alternate, intending to scale back volatility available in the market throughout contract expiry days. In response to this new regulation launched by SEBI, the National Stock Exchange of India (NSE) has introduced plans to discontinue weekly index derivatives for the Bank Nifty, Nifty Midcap Select, and Nifty Financial Services indices.
Nifty Midcap Select will see its final weekly expiry on November 18 whereas the final date for Nifty Financial Services is November 19.
Nifty Bank and the opposite two indices will, nonetheless, proceed to be accessible for month-to-month expiry buying and selling.
“We are in talks with Sebi if all of the month-to-month expiries needs to be held on the identical day or on totally different days of the week. Guidelines will come,” Sriram Krishnan, Chief Business Development Officer, NSE, said.
In the first half of FY25, Nifty Bank had the highest share of 38 per cent in terms of premium turnover in the derivatives market. Nifty was second on the spot with 28 per cent share, followed by BSE Sensex at 7 per cent and BSE Bankex at 3 per cent, according to IIFL Research.
Impact on Investors and Traders
Nifty Bank traders will now have to look for other options with market experts saying that volumes will get shifted to monthly expiries as well as other products.
The discontinuation of weekly expiry contracts will have an impact on traders and investors who use these contracts for their trading strategies. The discontinuation could lead to changes in volatility patterns and pricing dynamics. It is advisable for investors to closely monitor market movements and consider alternative investment options.
“Nifty Bank and Nifty weeklies cater to different types of traders. While Nifty is a broad market benchmark, Nifty Bank is a sectoral index and has the least number of constituents and a lower lot size making it the most volatile of the two. So those who have gotten used to the wild swings and multiple trading opportunities that such volatility presents, will certainly miss it, but isn’t that what SEBI intended in the first case,” Anand James, Chief Market Strategist, Geojit Financial Services, ..
As the brand new guidelines kick off in a staggered method starting from November 20, analysts say that the six steps proposed by Sebi could have a constructive affect in the marketplace ecosystem by discouraging informal merchants trying to make a fast buck.
“We see phased implementation over the subsequent 3-6 months as an enormous constructive for market well being because it prevents any systemic shocks and results in a calibrated tightening of the market,” Jefferies said.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
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