Understanding the NSE Circular on Contract Size Revision for Index Derivatives
On October 18, 2024, the National Stock Exchange of India (NSE) issued an important circular outlining changes to contract sizes for index derivatives. This revision is part of a broader effort to enhance investor protection and market stability in the Futures & Options (F&O) segment. Here’s a simplified breakdown of what you need to know.
Key Highlights of the Circular
1. Background of the Revision
This change comes in response to a directive from SEBI (Securities and Exchange Board of India). According to the new guidelines, each index derivative contract should have a minimum value of Rs. 15 lakhs at the time of its introduction. Additionally, the contract's lot size should ensure the contract value remains between Rs. 15 lakhs and Rs. 20 lakhs on the day of review.
2. Effective Date for New Contracts
The revised lot sizes will apply to all new index derivatives contracts introduced from November 21, 2024. This means any new index derivatives (weekly, monthly, quarterly, and half-yearly) will follow these updated lot sizes from this date onwards.
The existing weekly and monthly expiry contracts will continue with the existing lot size till its respective expiry date.
In case of quarterly and half yearly existing expiry contracts, the same shall be transitioned to the new lot size on December 24, 2024, end of the day for BANKNIFTY and December 26, 2024, end of the day for NIFTY.
The day spread order book will not be available for the combination contract of December 2024 - February 2025, January 2025-February 2025 and January 2025-March 2025.
3. Updated Lot Sizes for Index Derivatives
| Underlying | Symbol | Existing Lot Size | Revised Lot Size |
|---|---|---|---|
Nifty 50 | NIFTY | 25 | 75 |
Nifty Bank | BANKNIFTY | 15 | 30 |
Nifty Financial Services | FINNIFTY | 25 | 65 |
Nifty Midcap Select | MIDCPNIFTY | 50 | 120 |
Nifty Next 50 | NIFTYNXT50 | 10 | 25 |
The lot size for quarterly and half-yearly contracts will be revised from December 26, 2024, end of the day for Nifty, and December 24, 2024, end of the day for Nifty Bank. Other indices, Nifty Next 50, Nifty Financial Services, and Nifty Midcap Selcect do not have quarterly and half-yearly contracts.
| Index Derivatives | Expiration Cycle | Expiry Date | Particulars |
|---|---|---|---|
NIFTY | Weekly | 19-Dec-2024 | Last weekly expiry with existing lot size |
NIFTY | Weekly | 02-Jan-2025 | First weekly expiry with revised lot size |
NIFTY | Monthly | 30-Jan-2025 | Last monthly expiry with existing lot size |
NIFTY | Monthly | 27-Feb-2025 | First monthly expiry with revised lot size |
NIFTY | Quarterly & Half Yearly | 27-Mar-2025 | Lot size of all existing quarterly and Half yearly expiry contracts will be revised from December 26, 2024, EOD. |
BANKNIFTY | Monthly | 29-Jan-2025 | Last monthly expiry with existing lot size |
BANKNIFTY | Monthly | 26-Feb-2025 | First monthly expiry with revised lot size |
BANKNIFTY | Quarterly | 26-Mar-2025 | Lot size of all existing expiry contracts will be revised from December 24, 2024, EOD |
FINNIFTY | Monthly | 28-Jan-2025 | Last monthly expiry with existing lot size |
FINNIFTY | Monthly | 25-Feb-2025 | First monthly expiry with revised lot size |
MIDCPNIFTY | Monthly | 27-Jan-2025 | Last monthly expiry with existing lot size |
MIDCPNIFTY | Monthly | 24-Feb-2025 | First monthly expiry with revised lot size |
NIFTYNXT50 | Monthly | 31-Jan-2025 | Last monthly expiry with existing lot size |
NIFTYNXT50 | Monthly | 28-Feb-2025 | First monthly expiry with revised lot size |
- Please note, the March 2025 contract which was introduced as quarterly contract will become far month contract of the respective index derivatives on December 2024 monthly expiry day (EoD).
For further information, Click here to read NSE Circular dated October 18, 2024 along with NSE circular dated October 22, 2024.