BSE Plans New Monthly Index Options and Revamps Bankex to Boost Derivatives Share

As per ET news reports, the Bombay Stock Exchange (BSE) is planning to expand its presence in the derivatives market by launching new monthly index option products and revamping its Bankex index. 

This move comes nearly a year after market regulator SEBI restricted weekly derivative contracts to one index per exchange, prompting exchanges to look for alternative growth opportunities.

Bankex Set for a Major Overhaul

BSE is restructuring its Bankex index to make it more attractive for monthly derivatives trading. 4 new stocks (Canara Bank, AU Small Finance Bank, Punjab National Bank, and Union Bank of India) will be added to the index from December 26, taking the total number of constituents to 14.

Along with expanding the stock universe, BSE is also changing the weighting structure, with the top three stocks capped at 45%, aimed at improving diversification and stability.

Focus Shifts to Monthly Derivatives

As per news reports, BSE plans to introduce 2-3 additional monthly index option products, which it believes are economically meaningful for the market. The strategy is designed to reduce reliance on weekly expiry contracts and encourage traders to participate in longer-dated options.

Monthly options generally carry lower premiums compared to weekly contracts, making them potentially more cost-effective for traders while improving premium quality for the exchange.

Strong Momentum in Sensex Derivatives

BSE’s push into monthly products is supported by the strong performance of its Sensex derivatives, which have seen rapid growth since their relaunch in May 2023. The Sensex options segment has gained significant traction among brokers and foreign portfolio investors, helping BSE close the gap with NSE in index derivatives.

Long-Term Strategy and Market Deepening

The broader objective, as per reports, is to deepen market participation beyond expiry-day trading. By promoting trading in longer-dated contracts and on non-expiry days, BSE aims to improve profitability and reduce the impact of fixed regulatory and clearing costs.

At the same time, BSE is strengthening its GIFT City operations, upgrading technology and expanding its offshore product offerings to support future growth.

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Conclusion

As per news reports, BSE’s plan to revamp Bankex and launch new monthly index options signals a strategic shift in India’s derivatives market. With regulatory curbs on weekly contracts and growing interest in stable, longer-dated products, BSE appears focused on building sustainable growth in index derivatives beyond short-term trading frenzy.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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