REVISION IN NIFTY MIDCAP SELECT FUTURES & OPTIONS EXPIRY DAY: NOW ON MONDAY'S

On July 12, 2023, the National Stock Exchange (NSE) vide circular no. 118/2023 announced that w.e.f. August 16 2023, the expiry date and maturity date for all the existing NIFTY Midcap Select (MIDCPNIFTY) futures and options contracts will be revised/preponed to Monday.

Changes in Nifty Midcap Select Futures & Options Expiry Day in Detail

• At EOD of August 16, 2023, the expiry date and maturity date for all existing futures and options contracts will be revised/preponed to Monday as per revised expiry dates as mentioned in the table below. For e.g. the expiry/maturity date of existing contract maturing on August 23, 2023 (Wednesday) will be preponed to August 21, 2023 (Monday).
• The first Monday expiry will be on August 21, 2023.
• Any new contract created for trading on / after EOD of August 16, 2023 shall be created as per the revised expiry day as mentioned in the below table.

Below are the changes in the expiry day of derivatives contract on MIDCPNIFTY

Implications on existing positions

• At EOD of August 16, 2023, the expiry date and maturity date for all existing monthly and weekly derivatives contracts will be revised/preponed to Monday as mentioned in the table above.
• Expiry cycles upto August 16, 2023 will continue to be on Wednesday only
• The change shall come into effect from EOD of August 16, 2023 and revised contracts shall be available for trading from August 17, 2023

Reasons for the change in Nifty Midcap Expiry Day

NSE tends to review and update its policies and procedures to ensure the smooth functioning of the market and to address the evolving needs of market participants, much like any other financial exchange.

There may be several reasons behind the change according to us, including:

• Market efficiency: NSE might be trying to reduce complexity and streamline trading operations by aligning the expiry days of different contracts such as Nifty, Bank Nifty, Nifty Financial or Nifty Midcap contracts. This can facilitate better price discovery and improve overall market liquidity
• Harmonization of multiple contract cycles: Traders who engage in multiple indices or in cross index hedging will be benefited from this change.
• Risk Management: One of NSE’s primary roles is to safeguard market integrity and stability.There are various risks associated with market manipulation or undue concentration of positions, and NSE might be mitigating these risks by changing the expiry day. The possibility of excessive volatility may be tackled by spreading out the expiry days across the week,
• Feedback from market participants: The exchange may also consider a strong demand or consensus from valued participants such as traders, institutional investors or brokers and make adjustments accordingly

For more details, kindly  read the below circular issued by the National Stock Exchange (NSE).

https://archives.nseindia.com/content/circulars/FAOP57538.pdf

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