BSE To Discontinue Weekly Index Derivatives Contracts Of Bankex, Sensex 50

The BSE is the first exchange in Asia, having been founded as the Native Share and Stock Brokers’ Association in 1875. The growth of India’s capital markets has been greatly aided by the BSE. Investors can trade debt instruments, mutual funds, stocks, currencies, and derivatives on the BSE.

Mid-November will see the end of the weekly index on the BSE:

The BSE discontinued weekly index derivatives on the Sensex 50 on November 14 and on Bankex on November 18, as a result of significant changes made to the equity index derivatives market by the Securities and Exchange Board of India (SEBI). The BSE will continue to offer the Sensex as its primary tradeable index, and each exchange will be allowed to offer derivatives contracts with weekly expiries for only one benchmark index. This comes after worries about how speculative trading can be, especially on days when there are expirations.

SEBI guidelines for contracts value:

SEBI has increased the minimum contract value for index derivatives to Rs 15 lakhs, with plans to raise this to up to Rs 20 lakhs in the future in addition to these measures. Additionally, the regulator has eliminated calendar spread benefits on expiry days for contracts that are approaching maturity and mandated upfront premium payments from buyers.

Penalty on Broker:

Exchanges will now have to check intraday positions at least four times a day, and any violation of these limits will result in penalties similar to those that are applied at the end of the trading day. The decision was made in response to worries about the growing number of retail options traders, who have been identified as a possible danger to household budgets.

SEBI seeks to lower trader losses on an individual basis:

Nine out of ten individual traders lost money in the futures and options (F&O) market over the three years ending in March 2024, according to a SEBI study that was published last month. The total losses incurred by these traders exceeded Rs 1.8 lakh crore, with an average loss of Rs 2 lakh per trader. Approximately 400,000 traders, or the top 3.5% of loss-makers, lost an average of Rs 28 lakh. The study also showed that the number of younger traders has increased; in the most recent financial year, the proportion of F&O participants under 30 years old increased from 31% to 43%. 

BSE Ltd. stock is 4% up today:

The stock of BSE Ltd. is presently trading at Rs. 4,112.55 per share, up more than 4% intraday from the peak traded price of Rs. 4,194.30 per share, which is close to the 52-week high.

Conclusion: BSE stopped offering derivatives on the Sensex 50 and Bankex weekly index during the time that SEBI was enforcing more stringent regulations to prevent excessive risk-taking in the derivatives market.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.