SEBI chairman Tuhin Kanta Pandey says “There is need to increase the tenure of equity derivatives. There will be a consultation paper w.r.t an increase in tenure of equity derivatives”.
So what does it mean, here I’ll explain clearly.
SEBI chairman points to increase tenure of equity derivatives, and also to write consultation paper. It means currently in NSE, BSE F&O stocks have three monthly contracts.
- Present month (August)
- Next month (September)
- Far month (October)
After every monthly expiry, every one month will be added, cycle wise.
But SEBI chairman says needs to increase tenure means, increase long-dated contracts. For example it may be five months long or maybe six months or more, sebi chairman didn’t points any number in his recent statements. This will give investors more flexibility, more hedging low risk in investing.
SEBI Chairman also says “Longer expiry for equity derivatives is still at thought process stage, no work has started”.
Impact on BSE, Angelone:
Both stocks down more than 5% after the SEBI chairman Statement.
While increasing tenure is good for the above stocks because it will increase turnover and fees , but this may also effect their daily liquidity. If SEBI increases tenure, liquidity may see shift or spread over, it may bring lower monthly volumes. Impact on volumes will be negative for stocks like Angelone, BSE.
—Disclaimer: The information provided in this article is for educational and informational purposes only.