Sebi sets timelines for derivatives rollout on Bankex, BankNifty, FinNifty

Markets regulator Sebi on Thursday came out with guidelines for stock exchanges to implement eligibility criteria for derivatives on non-benchmark indices such as Bankex, FinNifty and BankNifty.

In its circular, Sebi said stock exchanges must adjust the composition and weights of existing non-benchmark indices.

For Bankex and FinNifty, the changes must be made in a single phase by December 31, 2025, while for BankNifty, adjustments will be done in four monthly phases and completed by March 31, 2026 to ensure an orderly rebalancing of index-tracking funds, it added.

The move is aimed at boosting market efficiency, enhance representation of the banking and financial sectors and give more diverse trading and investment opportunities.

According to the circular, exchanges are required to comply with the prudential norms specified in Sebi's directive.

Sebi said non-benchmark indices must follow certain rules to qualify for derivatives trading. These include having at least 14 constituent stocks, ensuring that the largest stock's weight does not exceed 20 per cent, the combined weight of the top three stocks stays within 45 per cent, and that the remaining stocks follow a descending weight order based on their size.

The regulator has asked stock exchanges and clearing corporations to update their systems, notify market participants in advance, and ensure compliance by the given timelines.