SEBI’s Crackdown on Weekly Options Expiry: Impact on NSE Unlisted Shares

The Finance Ministry and SEBI are currently in advanced talks to curb speculative trading in the options market, a move that could directly impact the National Stock Exchange (NSE). One major reform under consideration is the complete discontinuation of weekly expiry contracts, including those for Nifty 50 — currently the only index with such an option on NSE. This initiative builds upon a major regulatory step SEBI took last year, which already impacted NSE’s derivatives volumes. A) Event 1: SEBI’s 2024 Rule — One Index, One Weekly Expiry On November 20, 2024, SEBI implemented a rule that limited weekly derivatives contracts to only one benchmark index per exchange. What changed? Bank Nifty, FinNifty, and Midcap Nifty all lost their weekly expiries. Only Nifty 50 retained the right to continue weekly options. The rest shifted to monthly expiries, typically on the last Thursday of each month. This was aimed at reducing intraday volatility and discouraging speculative frenzy in short-dated options. B) Event 2: SEBI Now Plans Full Ban on Weekly Expiry Now in 2025, SEBI is reportedly planning the next phase of reform: Completely end weekly options contracts, including Nifty 50. Introduce bi-monthly or monthly expiries instead. Lower margin requirements in the cash segment. Recommend reduction in Securities Transaction Tax (STT) to promote delivery-based equity trading. The idea is simple: shift market participation from speculative trades to long-term equity ownership. C) NSE’s Revenue Model: Derivatives Drive the Engine Over 60–70% of NSE’s revenues come from transaction charges, with derivatives (especially weekly options) being the biggest contributors. The following impacts are anticipated: Reduced trading volumes in derivatives if weekly options are completely banned. Fall in transaction fees, which will weigh on short-term earnings. Lower volatility may reduce speculative arbitrage, impacting high-frequency trading activity. So yes — in the short term, this is negative for NSE’s topline. D) Long-Term Positive: Boosting the Cash Market SEBI’s reform package isn’t just about restrictions. It also includes pro-market initiatives: Lowering STT on delivery trades makes cash investments more cost-effective. Reducing margins in the cash segment encourages broader participation. Less speculation could boost confidence among long-term investors and institutions. This shift could help NSE: Diversify revenue from derivatives to equity trading. Increase IPO listings and related income. Expand its data and analytics offerings. E) What Should Unlisted NSE Shareholders Do? Timeline Impact on NSE Implication for Unlisted Investors Short-Term Revenue dip from options ban Possible correction in unlisted share valuation Long-Term Balanced, diversified revenue model Likely stable and sustainable growth So, if there's a temporary valuation dip in the unlisted space, it might just be the right time to accumulate NSE shares. F) Final Thoughts SEBI’s move to end weekly options expiry is a structural reform. While it may dampen NSE’s income temporarily, it paves the way for a more mature and fundamentally driven equity market. Investors in NSE’s unlisted shares should closely watch how the cash market volumes evolve in response.