The Securities and Exchange Board of India (SEBI) is weighing a proposal to replace the current weekly expiry cycle in derivatives with bi-monthly or monthly expiries in a bid to reduce short-term volatility and steer traders back towards the cash equity market.
The matter will be discussed at a meeting with secondary market stakeholders on August 19, and recommendations from the industry will be incorporated into SEBI’s final proposals, sources said.
“While retail participation in index options expiry-day trades has moderated somewhat after recent steps, there is still too much concentration in short-term expiries and trades,” said a person aware of the discussions. “Extending maturities and nudging more long-term trading, hedging and investments would be ideal for our ecosystem.”
Speculation curbs
The regulator believes that multiple expiry days within a week have been fuelling speculative trading and distorting price discovery. SEBI’s latest data show that net losses incurred by individual traders in the equity derivatives segment have widened by 41 per cent in FY25 compared to FY24, with over 90 per cent of retail traders continuing to lose money in options trades.
SEBI is also evaluating ways to boost participation in the cash segment, including a possible reduction in securities transaction tax (STT) and lower margin requirements for cash market trades.
An email sent to SEBI seeking comment remained unanswered.
The development comes as the regulator investigates global high-frequency trading firm Jane Street for alleged manipulation of index levels on expiry days to profit from Bank Nifty options. The US-based firm has disgorged ₹4,844 crore in alleged unlawful gains to the regulator.
Since October, SEBI has rolled out a slew of measures aimed at curbing excessive speculation in the F&O market. These include limiting weekly expiries to one per benchmark index, increasing lot sizes, mandating upfront margin collection and introducing delta-based or future-equivalent position limits in index options.
Published on August 5, 2025