NSE increases lot sizes for Nifty, Bank Nifty and other index derivatives (Image Source: iStockphoto)
The National Stock Exchange (JAN) has increased the lot size for its five index derivative contracts following an order by the Securities and Exchange Board of India (Sebi) to ensure a minimum contract value of Rs 15 lakh. The changes will apply to new indexed derivative contracts (weekly, monthly, quarterly and semi-annual) starting November 20, 2024.
According to the NSE circular, the lot size of Nifty50 will increase from 25 to 75 contracts, a three-fold increase, while the lot size of Nifty Bank will double from 15 to 30.
Nifty Financial Services, commonly known as Fin Nifty, will see its lot size increase from 25 to 65. Nifty Midcap Select’s lot size will increase from 50 to 120, and Nifty Next 50 will see an increase from 10 to 25.
“Existing contracts with weekly and monthly expiration will continue with the existing lot size until their respective expiration date. In the case of existing contracts with quarterly and semiannual expiration, they will be moved to the new lot size on December 24, 2024 , end of day for Bank Nifty and December 26, 2024, end of day for Nifty,” NSE said in the circular.
This adjustment is expected to impact market liquidity and align with Sebi guidelines for derivatives trading.
Earlier this month, Sebi proposed a six-step framework to address the issue of consumers losing money in high-risk, high-return futures and options gambling.
“Given the inherent leverage and higher risk of derivatives, this recalibration of the minimum contract size, in line with market growth, would ensure that the built-in eligibility and suitability criteria for participants are maintained as intended,” it had said. Sebi.
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