SEBI Tightens Equity Derivatives Rules, Asks Exchanges To Pick Tuesday or Thursday
Moneylife Digital Team 27 May 2025
In a significant move aimed at enhancing market stability and investor protection, market regulator Securities and Exchange Board of India (SEBI) has issued a circular restricting the expiry of equity derivatives contracts to just two days in a week — Tuesdays or Thursdays — for all recognised stock exchanges.
 
The circular, issued on 26 May 2025, follows public consultations and detailed deliberations within SEBI’s secondary market advisory committee. It is designed to address rising concerns over 'expiry day hyperactivity' and the associated risks of increased market volatility.
 
Under the new framework, each stock exchange will be permitted to designate only one day — either Tuesday or Thursday — as the expiry day for their equity derivatives contracts. This includes all index and single stock derivatives.
 
Further, SEBI says exchanges will be allowed to operate only one weekly benchmark index options contract on the selected expiry day. "All other equity derivatives — including benchmark index futures, non-benchmark index futures and options, and single stock futures and options — must now carry a minimum one-month tenor and expire in the last week of every month on the chosen day."
 
In a bid to standardise contract structures and prevent arbitrage-induced instability, SEBI has also directed exchanges to seek prior regulatory approval for any change to their existing expiry day schedules.
 
The regulator highlighted that, while staggering expiry dates across exchanges helps reduce concentration risk and allows for product innovation, an unchecked proliferation of expiry days could hurt retail investors and destabilise the market.
 
SEBI has instructed all stock exchanges to submit their expiry day proposals by 15 June 2025, and take steps to align their systems and regulations with the circular. Exchanges and clearing corporations have also been asked to amend relevant bye-laws and rules to facilitate compliance.
 
This move is expected to streamline market operations, create uniformity and address growing concerns over excessive volatility and speculative behaviour observed on multiple expiry days.
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