“Considering the need for balanced market development and avoidance of concentration risk in the market, BSE has requested NSE to consider shifting the Bank Nifty Expiry to any day other than Friday,” the exchanges said in a joint statement on Tuesday, adding this will help the complementing Sensex/Bankex derivatives grow, and thus de-risk the market. “Based on this, NSE, in the interest of market development, has decided to withdraw the circular…with immediate effect.”

The NSE move to shift its Bank Nifty contract expiry was seen by certain market participants as a proxy war between BSE’s recently appointed chief executive officer (CEO) Sundararaman Ramamurthy and NSE CEO Ashishkumar Chauhan, who moved from BSE to NSE in July 2022. Mint reported on the development and its fallout on 7 and 21 June.

Ramamurthy announced in mid-May that BSE would change the expiration day of its Sensex and Bankex weekly and monthly derivatives contracts to Friday from Thursday to avoid being crowded out by NSE. This was done to attract participation and volumes, an endeavour that remained unsuccessful for decades before he took the reins at BSE.

The chasm between NSE and BSE derivatives volumes is borne out by data showing NSE’s average daily turnover (ADT) in the year ended 31 March 2023 at ₹153.5 trillion, against a measly ₹1.38 trillion for BSE. Ramamurthy’s bid was to reduce the gap. Index options account for over 98% of derivatives volumes on both exchanges.

His gambit worked, with BSE’s derivatives notching an average daily turnover of ₹24,093 crore in June from just ₹1,167.91 crore in May. However, BSE’s initial success was threatened by NSE on 6 June, deciding to shift the expiration of its weekly and monthly Bank Nifty contracts to Friday from Thursday while retaining Nifty futures and options expiry on Thursday to thwart BSE’s bid for volumes. The first expiration was fixed on 14 July.

The NSE move back then was described as a “masterstroke” by Chandan Taparia, derivatives and technical head at Motilal Oswal Financial Services, who said traders and investors would flock to Bank Nifty options rather than Sensex contracts on Friday.

On Tuesday, Taparia said, “BSE’s volumes could grow exponentially, which would be good for the market and for competition while removing the concentration risk inherent in a single exchange accounting for the bulk of volumes.”

Some market feedback suggested that BSE revise its expiry to Monday from Friday. Monday is the only day that doesn’t see any expiry as Tuesday is the FinNifty expiry, Wednesday Nifty MidCap expiry, Thursday Nifty and Bank Nifty options expiry, and Friday Sensex and Bankex expiry.

Updated: 28 Jun 2023, 01:11 AM IST