The Securities and Exchange Board of India (SEBI) has taken a strong step to reduce the growing risks in the futures and options (F&O) market. From now on, stock exchanges must fix the weekly expiry of equity derivatives on either Tuesday or Thursday. This change is expected to reduce expiry-day volatility, which has often led to heavy losses for small investors.
Why SEBI Took This Step to Fix Expiry Days
SEBI’s move comes after a sharp rise in trader losses in the F&O segment, especially among retail participants. A report from SEBI in September 2024 revealed shocking data:
- Retail traders lost ₹1.8 lakh crore from FY22 to FY24.
- Around 93% of F&O traders lost money, with an average loss of ₹2 lakh per trader.
- The top 3.5% of loss-making traders recorded average losses of ₹28 lakh.
- Only 1% of traders earned profits above ₹1 lakh.
In FY24 alone, 92.5 lakh individuals and firms participated in index derivatives trading on the NSE and recorded a collective loss of ₹51,689 crore.
These numbers clearly showed the urgent need for a regulatory intervention. SEBI’s decision to fix weekly expiry to a single day aims to curb aggressive speculation and bring some balance back to the market.
What Has Changed for Traders and Exchanges?
As per the SEBI circular issued on 26 May 2025, all stock exchanges must choose one day — either Tuesday or Thursday — as the expiry day for their weekly benchmark index options. This applies to key contracts like Nifty and Sensex options.
For all other equity derivatives, such as:
- Benchmark index futures
- Non-benchmark index options and futures
- Single stock futures and options
These must now follow a monthly expiry and will end in the last week of the month, again only on Tuesday or Thursday.
Each stock exchange is now allowed to offer only one weekly expiry contract for its benchmark index. This rule aims to bring uniformity and reduce overlap, which often increases volatility when multiple contracts expire on different days.
Previous Expiry Day Practices Created Market Noise
Before this circular, different exchanges used different expiry days to attract trading volume.
- BSE had moved its weekly Sensex expiry from Friday to Tuesday.
- NSE shifted Bank Nifty from Thursday to Friday and later to Wednesday.
With these frequent changes, expiry days had become confusing and led to frequent speculative trading. Traders often took high-risk bets on expiry days, which impacted overall market stability and increased losses.
Now, with SEBI’s fixed expiry day policy, exchanges cannot alter expiry dates at will. Instead, they must submit their plan to SEBI by 15 June 2025 to comply with the rule.
How Retail Investors Will Benefit from This Change
This new expiry system will help simplify trading for everyday investors. A fixed expiry day:
- Reduces weekly speculation pressure
- Provides a clear trading window
- Helps avoid sudden market swings on random expiry days
For retail investors who often lack the tools or experience to deal with high-volatility trading, this is a positive development. The idea is not to stop trading but to ensure safer participation by reducing the risks of expiry-day traps.
SEBI believes that too many expiry contracts gave traders multiple windows for short-term speculation. Now, with only one expiry per week per exchange, retail investors can plan trades with more predictability and less panic.
What Traders and Brokers Should Do Now?
All market participants — from brokers to traders — need to align their strategies with the new system. Brokers will also need to update their risk systems and notify clients about the changes.
For traders, this is a good time to rethink their trading behaviour, especially if they were previously chasing expiry-day momentum.
More importantly, this is also a reminder to shift focus from short-term speculation to long-term investment, saving, or retirement planning, which offers real financial growth and security.
What’s Next?
Stock exchanges will now coordinate with SEBI to finalise their selected expiry days. Until then, they must pause new changes to contract expiry dates. Once approved, this rule will bring better discipline to F&O trading and hopefully protect India’s growing base of retail market participants from future damage.
Sources: SEBI, Moneycontrol, NSE Reports
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
