NSE vs BSE: How Sebi’s curbs are reshaping India’s options market

Despite the regulatory crackdown, the overall impact on trading volumes has been minimal. Data from the two stock exchanges reveal that index and stock options’ premium turnover declined by less than 3% in the six months leading up to March 7, compared to the corresponding period in the previous fiscal year.

A closer look at the numbers shows that this limited drop is largely due to a surge in options trading on the BSE, albeit on a significantly lower base. While the NSE has witnessed a sharper decline in trading volumes, the steep rise in BSE’s turnover has significantly offset the overall impact of Sebi’s restrictions. 

Incidentally, Sebi’s wholetime member Ananth Narayan recently stressed that Sebi was not against any market segment, but simply wanted to curb excesses on weekly option expiry days.

Also read: Mint Explainer: How Sebi’s new proposals aim to curb risks in the derivatives market

The data highlights the growing competition among stock exchanges as they vie for a larger share of the derivatives market. This rivalry has intensified with the NSE revising the expiry day of its derivatives contracts, strategically aligning its weekly Nifty contract expiry closer to the expiry schedule of the BSE.

The combined index and stock options’ average daily turnover (ADT) has fallen by just 2.9% to ₹66,624 crore from October through 7 March this fiscal (FY25) from a combined ₹68,617 crore in the corresponding period of FY24, data from NSE and BSE shows.

To curb excessive retail participation in options trading on expiry days, the Sebi introduced six regulatory measures starting October 1 last year. Among these, three key changes impacted trading volumes: restricting weekly contract expiries to just one per exchange (down from multiple expiries earlier), nearly tripling the contract size, and implementing additional margin requirements on expiry days in a phased manner over the past six months. These measures collectively contributed to the decline in overall trading volumes.

However, the impact has been lesser than thought because of a significant jump in volumes on BSE, albeit on a low base.

BSE gains, NSE declines

For instance, ADT (options premium based) of index and single stock options on BSE jumped almost threefold y-o-y to ₹9,943 crore in the current fiscal six -month period. In contrast, NSE combined options’ ADT (premium) fell 13% to ₹56,681 crore from October to five trading days of March from the same period last fiscal.

“Sebi’s curbs seemed to have had a favourable impact on BSE which had one liquid weekly contract (Sensex) as opposed to NSE, which had four liquid weekly contracts,” said Rajesh Baheti, founder and MD, Crosseas Capital.

“Post the curbs BSE has got traction on a lower base while NSE has been impacted more adversely.”

Also read: How Sebi’s serial crackdown crimped F&O volumes and crashed broking-firm stocks

However, the overall impact of Sebi’s restrictions has been cushioned by a surge in trading of Sensex weekly options. The curbs were introduced to prevent excessive trading by retail investors, particularly on expiry days, after regulatory findings revealed that individual investors lost a staggering ₹1.8 trillion between fiscal years 2022 and 2024 due to such trading practices.

Expiry day rivalry

Meanwhile, the NSE has decided to shift the expiry day of its weekly Nifty derivatives contract from Thursday to Monday, effective April 4. All other NSE derivatives contracts with different tenures will also now expire on Mondays.

This change places NSE’s expiry just a day before the BSE’s weekly Sensex options contracts which expire on Tuesdays—raising concerns among BSE stakeholders about potential market disruptions.

While BSE’s MD & CEO S Ramamurthy said the ramification of NSE’s move on BSE and its response would have to be discussed “internally, post consultation with its member-brokers,” Ashishkumar Chauhan, MD and CEO of NSE pitched for same day expiry for multiple exchanges at a recent media event.

Chauhan said that currently there were two exchanges offering expiries on different days of week, but then three other exchanges (NCDEX, MCX, and MSEI) could also ask for expiries and one would end up with expiries on five days which would beat Sebi’s perspective of limiting the number of expiries in a week.

Also read: Sebi goes after Asmita Patel—‘she-wolf’ of the stock market

He quipped that a new sixth and seventh national exchange could ask for trading on Saturday and Sunday and an eight exchange could demand another day to be added to a week.

“Whatever was Sebi’s perspective of reducing daily expiry I don’t think is going to be met if we continue to have multiple exchanges having expiries on different days. If you want to really remove that you need to have one single day (of expiry),” he said at Moneycontrol Global Wealth Summit 2025.