SEBI Weighs Shift to Fortnightly Expiry in Index Options Market

by Ashok

Posted on July 9, 2025

SEBI’s Consideration of Fortnightly Expiry for Index Options

The Securities and Exchange Board of India (SEBI) has been actively reforming the derivatives market, especially index options, to address concerns over excessive speculation, volatility, and retail investor protection. Recent measures have included:

• Limiting weekly expiries to just one per benchmark index per exchange.
• Mandating fixed expiry days (Tuesday or Thursday) for index options contracts.
• Increasing margins and contract sizes to curb risk and speculation.

Fortnightly (Bi-Weekly) Expiry: The Latest Development

SEBI is now reportedly considering shifting index option expiries from a weekly to a fortnightly (bi-weekly) schedule. This move is being discussed in light of continued surges in trading volumes and persistent concerns about speculative activity, even after earlier reforms.

Key Points:

• Reason for Consideration: Despite reducing the number of weekly expiries and tightening risk controls, trading volumes in index options remain extremely high, and retail investor losses on expiry days are a concern. The Jane Street incident, involving alleged index manipulation, has further heightened regulatory scrutiny.
• Proposed Change: If implemented, the expiry cycle for index options would shift from every week to every two weeks (fortnightly).
• Current Status: As of July 2025, this is still under consideration and not yet an official rule. SEBI has not published a formal circular mandating fortnightly expiries, but market observers and participants widely expect a decision soon if volume frenzy does not subside.

Implications of Fortnightly Expiry

• Reduced Trading Frenzy: Fortnightly expiries would likely dampen the repetitive, high-risk trading cycle associated with weekly expiries, potentially reducing volatility and speculative losses for retail traders.
• Market Structure: The change would further streamline expiry calendars, making risk management easier for both exchanges and participants.
• Regulatory Intent: SEBI’s approach signals a willingness to adapt expiry structures dynamically to maintain market integrity and investor protection, especially if current reforms do not achieve the desired effect.

Summary Table: Expiry Schedule Evolution

Conclusion

SEBI is closely monitoring the impact of recent reforms in the index options market. If trading volumes and speculative activity remain elevated, the regulator is prepared to implement a fortnightly expiry schedule for index options. This potential change is part of SEBI’s broader effort to safeguard retail investors and ensure the stability of India’s derivatives markets.

Ref: Sebi mulls shifting weekly options expiry to fortnightly expiry: Report