The National Stock Exchange (NSE) has recently obtained approval from the Securities and Exchange Board of India (Sebi) to designate Tuesday as its new expiry day, as per a filing made by the company on June 16. On the other hand, the Bombay Stock Exchange (BSE) has confirmed that Sebi has accepted its proposal to have Thursday as the expiry day.

Both exchanges have been informed about this decision by the regulator. They have communicated that existing contracts will maintain their current expiry days, except for long-dated index options contracts, which will be adjusted accordingly. Derivative contracts expiring on or before August 31, 2025, will retain their current expiry day. However, contracts expiring after September 1, 2025, will see a change in their expiry days to Tuesday for NSE and Thursday for BSE.

The Metropolitan Stock Exchange is also said to have received Tuesday as its expiry day for derivative contracts, according to sources.

Rohit Srivastav, Founder and Market Strategist at Indiacharts.com, explains that having an options expiry on a Tuesday impacts options buyers. The weekend becomes unfavorable for holding options due to time decay, leading most buyers to close their positions by Friday. He also mentions that Thursday expiry is more suitable for positional traders who can hold their positions over a few days without concerns about weekend time decay.

Market participants believe that Monday and Tuesday trading is likely to attract day traders who engage in intraday trading and follow specific strategies. This move by NSE is aimed at increasing intraday volatility and trading volume on these days.

One industry insider commented that NSE's preference for Tuesday as the expiry day will give them an additional trading day. The proposals regarding the expiry days were deliberated upon at a meeting of Sebi's Secondary Market Advisory Committee (SMAC).

In November 2024, NSE had initially planned to shift the expiry of index derivative contracts to Thursday, but later decided to seek Monday as the expiry day. The recent communication from Sebi has finalized the expiry days to be Tuesday and Thursday, as indicated in the draft circular from March 27. Sebi Chairman Tuhin Kanta Pandey had hinted in May about issuing a circular on F&O expiry days within a month.

The change in NSE's expiry day is expected to help the exchange regain market share from BSE. Derivatives trading plays a significant role in the revenue of both exchanges. NSE, being the largest derivatives contracts handler globally, aims to switch its expiry day to Tuesday to compete with BSE, especially as the regulator has been urging both exchanges to control excessive trading.

For BSE, the revenue growth in FY25 was primarily driven by strong volumes in Sensex derivatives products, expansion of the client base, and increased non-expiry day activities. The equities turnover at BSE has shown robust performance in the first half of FY25, with a significant increase in average daily turnover compared to the previous year. Additionally, the Index Derivatives segment at BSE has experienced growth, recording the highest-ever average daily premium turnover for the quarter ending in March.