The Securities and Exchange Board of India (SEBI), on 26 May 2025, issued Circular No. SEBI/HO/MRD/MRD-TPD-1/P/CIR/2025/76 prescribing the framework for the final settlement day (expiry day) for equity derivatives contracts. The circular mandates that all equity derivatives contracts on a stock exchange must expire on either Tuesday or Thursday, standardising a practice that had previously been left to exchange discretion and had resulted in operational complexity and concentration risk concerns.
Background
Indian equity derivatives have grown into one of the world's largest segments by trading volume. The proliferation of weekly expiry contracts across multiple indices on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) had led to a situation where expiry-day concentration — characterised by heightened volatility and speculative activity — was occurring on multiple days of the week. Market participants and SEBI's own analysis identified this as a source of systemic risk and potential investor harm.
SEBI had been progressively tightening the derivatives framework through a series of measures in 2024 and 2025, including restrictions on weekly options, increased lot sizes, and enhanced margin requirements. The present circular represents the structural component of this reform agenda.
Key Provisions
The circular establishes the following framework:
Uniform expiry days: All equity derivatives contracts on a given exchange must expire either on Tuesday or on Thursday. Each exchange must select one of these days as its designated expiry day.
Weekly index options: Each exchange may maintain one weekly benchmark index options contract that expires on its chosen day. This preserves the weekly options product while preventing proliferation of expiry events.
Monthly tenor minimum: All other derivatives contracts — including index futures, single stock futures, and single stock options — must have at least a one-month tenor and will expire in the last week of each month on the exchange's designated day.
Prior SEBI approval required: Stock exchanges must obtain SEBI's prior approval before changing the expiry day of any derivatives contract, preventing unilateral scheduling changes.
Compliance timeline: Exchanges are required to submit compliance proposals to SEBI by 15 June 2025, including necessary amendments to their bye-laws and regulations.
Implications for Practitioners
This circular restructures the derivatives landscape for brokers, proprietary trading desks, and institutional investors. Trading strategies built around multi-day weekly expiries will need to be recalibrated to account for the standardised expiry framework.
For securities law practitioners, the circular introduces a prior-approval requirement for any future changes to expiry schedules, creating a regulatory checkpoint that did not previously exist. Exchange compliance teams will need to prepare proposals and ensure bye-law amendments are completed within the stipulated timeline.
Market infrastructure providers — including clearing corporations, risk management systems, and trading platforms — must update their systems to reflect the new expiry structure. The June 2025 compliance deadline requires prompt action, and exchanges that currently operate non-conforming expiry schedules face the most significant adjustment burden.