Expiry day shift sets off new round of competition among bourses

Analysts have already begun scaling back BSE's earnings growth estimates, stating that NSE's move could help it reclaim its market share

The expiry day for derivatives contracts has become the latest point of contention between India's two largest stock exchanges — the National Stock Exchange of India (NSE) and the BSE.

 

The NSE’s recent announcement to shift the expiry day for Nifty derivative contracts from Thursday to Monday, effective April 4, is expected to shake up the market dynamics.

 

Analysts have already begun scaling back BSE's earnings growth estimates, stating NSE's move could help it reclaim its market share.

 

“BSE’s index option premium market share shot up from 16.4 per cent in December 2024 to 22.1 per cent in February 2025, mainly due to BSE revising the expiry day to Tuesday (from Friday). On March 4, NSE announced a revision to its index option expiry day from Thursday to Monday (one day before BSE’s expiry) with effect from April 4. This move will potentially help NSE reclaim its previous market share of 83.6 per cent (December 24). In January 2025 itself, 22.9 per cent/18.5 per cent of premium turnover for Sensex/Bankex was recorded one day before expiry. This is primarily attributable to BSE index option expiry on Tuesday versus NSE’s expiry on Thursday, implying a three-day gap. Retail traders tend to be more active closer to expiry when option values compress,” said a note by Nuvama Institutional Equities.

 

The brokerage has cut BSE’s FY26 and FY27 earnings estimates by 13.4 per cent and 11.6 per cent, respectively, and also the target price by nearly 30 per cent to ₹5,160, de-rating the stock to 40x earnings (from 50x earlier).

 

Shares of BSE last closed at ₹4,178 after plunging 30 per cent in the last 10 trading sessions. 

 

BSE's managing director (MD) and chief executive officer (CEO) Sundararaman Ramamurthy acknowledged that the market tends to have a short-term reaction to such developments, but remained non-committal on whether BSE would change its expiry day.

 

“We are trying to comprehend what the market feedback is, and based on that, we will be able to take a call,” he said.

 

Before Ramamurthy joined BSE in May 2023, all the derivatives volumes were concentrated at NSE. Upon his joining, BSE relaunched its Sensex and Bankex index derivatives and opted for differentiated expiry dates.

 

The move worked in BSE’s favour as trading volumes tend to spike ahead of expiry of contracts as traders dabble in low-valued contracts with an aim to generate super normal profits.

 

Soon, weekly derivatives contracts for various index derivatives such as Nifty 50, Sensex, Bankex, Nifty Financial Services and Bank Nifty had unique expiry days spread across the week.

 

As this fuelled excessive speculative activity, market regulator Securities and Exchange Board of India (Sebi) came up with a rule that said an exchange will be allowed to launch only one weekly expiry per week. As a result, BSE was forced to drop the Bankex weekly derivatives contracts and it moved Sensex expiry to Tuesday. Similarly, NSE had to discontinue weekly derivatives contracts based on Bank Nifty and Nifty Financial Services

 

This also opened the door to other exchanges to enter the fray, with National Commodity & Derivatives Exchange (NCDEX) announcing its foray into the equity derivatives segment.

 

Also, Metropolitan Stock Exchange (MSE) raised funds from investors in a bid to revive its business.

 

This led to concerns that soon there will be weekly index derivatives expiring every single day of the week.

 

“There may be many more new exchanges that may come up and ask for additional days in a week for their own daily expiries which might require other days to be added into the week. That’s why there should be a single expiry date for all exchanges in a week instead of every exchange having a different day for their own contract expiry in a week,” said Ashishkumar Chauhan, MD & CEO, NSE, at an event organised by Moneycontrol.

 

“If you have expiry of all the contracts on a single day, a matured exchange will continue to do volumes. However, an upcoming exchange can never come up,” said Ramamurthy.

 

He added, “This will also lead to concentration risk, which could result in increased volatility, liquidity stress and high probability of system glitches.”