A proposal to remove weekly futures and options (F&O) expiries is reportedly being considered as regulators look for additional ways to curb retail investor losses in India’s derivatives market and encourage more participation in the cash equity segment. The suggestion comes after a series of measures by the Securities and Exchange Board of India (SEBI) reduced retail participation and aggregate losses, but failed to eliminate the heavy concentration of trading around short-dated options.
The proposal, reported by NDTV Profit, is also linked to concerns around sharp expiry-day volatility, liquidity issues associated with the Closing Auction Session (CAS) and the amount of capital that remains tied up in options-related margins. If implemented, eliminating weekly expiries could push some traders toward longer-duration derivatives or the cash market, although there is no confirmed SEBI decision, implementation timeline or final regulatory framework yet.
Weekly F&O Expiry Removal Proposal Explained
Weekly expiry contracts have become a major driver of India’s options-trading activity.
Under the current system, eligible index options can expire at short intervals, creating frequent opportunities for traders to take positions that mature within days.
The latest suggestion would go further than the restrictions already introduced by SEBI.
Rather than simply limiting the number of weekly expiries, the proposal would potentially remove weekly F&O expiry altogether.
Reported Proposal At A Glance
| Particular | Details |
|---|---|
| Proposal | Remove weekly F&O expiries |
| Reported by | NDTV Profit |
| Regulator involved | SEBI |
| Primary objective | Reduce retail F&O losses |
| Secondary objective | Encourage cash-market investing |
| Other concern | Expiry-day volatility |
| Capital impact | Potentially free money from options margins |
| Current status | Reported suggestion under consideration |
| Final SEBI decision | Not announced |
| Implementation date | Not announced |
The proposal should therefore be treated as a reported regulatory suggestion rather than a confirmed policy change.
Why SEBI Is Looking At Weekly Expiries
The latest discussion comes against the backdrop of persistent retail losses in equity derivatives.
SEBI’s FY26 data showed that individual investors lost ₹91,685 crore in the equity derivatives segment.
Although that was lower than the ₹1.12 lakh crore lost in FY25, the decline was accompanied by a significant fall in the number of active retail participants.
Retail F&O Losses
| Metric | FY25 | FY26 |
|---|---|---|
| Retail / individual losses | ₹1.12 lakh crore | ₹91,685 crore |
| Unique individual traders | 98.1 lakh | 78.6 lakh |
| Approx. participation change | — | -20% |
| Average loss per trader | ₹1.14 lakh | ₹1.17 lakh |
| Equity derivatives turnover | ₹213 trillion | ₹202 trillion |
The figures show why regulators remain concerned.
Aggregate losses fell, but average losses per participating trader increased, suggesting that simply reducing participation has not eliminated the underlying risk-taking behavior.
Retail Traders Remain Concentrated In Options
The problem is particularly pronounced in options.
NDTV Profit’s analysis of SEBI data said 99.3% of individuals traded options in FY26, while 93% operated exclusively as options buyers. Around 90% of options buyers lost money.
Retail Options Participation
| Indicator | FY26 |
|---|---|
| Individuals trading options | 99.3% |
| Traders operating only as options buyers | 93% |
| Options buyers losing money | ~90% |
| Aggregate retail F&O losses | ₹91,685 crore |
| Average retail loss | ~₹1.17 lakh |
Options buyers face particularly difficult odds because the value of short-dated contracts can deteriorate rapidly as expiry approaches.
Weekly expiries amplify that time decay.
Weekly Expiries Encourage Short-Term Trading
A weekly option gives traders an opportunity to make highly leveraged bets on short-term movements in an index.
Because the contract expires within days, traders can potentially generate large percentage gains from relatively small price movements.
The same structure can produce rapid losses.
Weekly option
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Short time to expiry
│
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Rapid time decay
│
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High sensitivity to market moves
│
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Expiry-day volatility
│
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Large gains OR rapid losses
This is one reason regulators have increasingly focused on expiry-day behavior.
India Already Restricted Weekly Expiries
The latest proposal would build on measures introduced in late 2024.
SEBI previously restricted weekly index derivatives to one benchmark index per exchange, with the Nifty 50 remaining the weekly index option on NSE and the Sensex on BSE.
The regulator also introduced higher expiry-day risk coverage and other restrictions.
SEBI’s F&O Measures
| Measure | Objective |
|---|---|
| Restrict weekly expiries | Reduce excessive short-term trading |
| Increase contract size | Raise entry threshold |
| Higher expiry-day risk coverage | Address tail risk |
| Upfront option-premium collection | Reduce settlement risk |
| Intraday position-limit monitoring | Strengthen surveillance |
| Remove calendar-spread treatment on expiry | Improve risk measurement |
| Higher STT | Increase trading cost |
The measures have already reduced overall activity, but the market remains heavily oriented toward short-duration options.
97% Of Index Options Trading Happens Near Expiry
Despite the regulatory changes, short-dated trading remains dominant.
NDTV Profit reported that 97% of index options trading still occurs within one week of expiry.
That figure helps explain why removing weekly expiries is being discussed as a potentially more direct way to alter trader behavior.
Options Trading Concentration
Index options turnover
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97% traded within
one week of expiry
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Heavy short-term focus
│
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Expiry-day activity
│
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Higher volatility + retail risk
If weekly expiries disappeared, traders would have fewer ultra-short-duration contracts available.
The Proposal Could Push Capital Toward Cash Equities
Another objective reportedly behind the proposal is to encourage investors to move money from derivatives into the cash equity market.
Options require relatively small upfront capital compared with buying the underlying shares.
That leverage can make derivatives more attractive to short-term traders.
Removing weekly expiries could reduce the appeal of repeated short-term bets and potentially redirect some capital toward stocks and long-term investment products.
Potential Capital Shift
| Current Preference | Possible Alternative |
|---|---|
| Weekly index options | Cash equities |
| Expiry-day trading | Longer-term investing |
| Short-term premium bets | Stock ownership |
| High-frequency derivatives | Portfolio investing |
| Options margin | Equity capital |
However, this shift is not guaranteed.
Some traders could simply move into monthly options, futures or overseas derivatives markets instead.
Options Margins Could Be Released
The reported proposal also focuses on capital efficiency.
A large amount of capital is required to support positions across the derivatives ecosystem, particularly for participants providing liquidity or selling options.
If weekly expiries disappear, some capital currently committed to short-duration derivatives could potentially become available for other investments.
The reported goal is to encourage this capital toward cash-market assets.
Potential Capital Flow
Options margins
│
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Weekly expiry positions
│
▼
Potential removal
│
▼
Capital released
│
├── Cash equities
├── Mutual funds
├── Longer-duration assets
└── Other investments
The actual amount of capital that could move would depend on how traders and market makers adjust their positions.
Closing Auction Session Adds Another Concern
The proposal is also reportedly being discussed against the backdrop of India’s new Closing Auction Session, or CAS.
SEBI introduced the 20-minute closing auction mechanism in August 2026 for eligible stocks, replacing the earlier method used to determine closing prices.
The mechanism is intended to improve price discovery but has created new interactions between the cash and derivatives markets.
Closing Auction Session
| Feature | Details |
|---|---|
| Introduced | August 3, 2026 |
| Auction window | 3:15 p.m. to 3:35 p.m. |
| Initial coverage | Stocks with F&O contracts |
| Purpose | Price discovery |
| Maximum deviation band | 3% |
| Market concern | Cash/derivative closing mismatch |
The interaction becomes especially important on expiry days, when derivatives positions are being settled against underlying prices.
CAS Has Raised Liquidity And Volatility Concerns
The latest proposal is reportedly also influenced by concerns about sharp volatility and low liquidity around the new closing mechanism.
Because the cash market now uses an auction to establish the official closing price while derivatives can continue trading, the two markets can temporarily diverge.
That can complicate arbitrage and increase sensitivity around expiry settlements.
Cash Vs Derivatives
Cash market
│
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Closing Auction Session
│
▼
Official closing price
│
│
└───────┐
▼
Derivatives
│
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Expiry settlement
│
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Potential price mismatch
This creates another reason why policymakers may want to reduce the concentration of risk around frequent expiry sessions.
SEBI Has Already Seen Results From Its F&O Curbs
The regulator’s earlier measures have had measurable effects.
Unique individual investors participating in equity derivatives declined from 98.1 lakh to 78.6 lakh, while aggregate individual losses dropped from ₹1.12 lakh crore to ₹91,685 crore.
Equity derivatives turnover also declined from ₹213 trillion to ₹202 trillion.
Impact Of Existing Measures
SEBI restrictions
│
├── Fewer retail traders
│
├── Lower aggregate losses
│
├── Lower F&O turnover
│
└── Higher average loss per trader
The mixed outcome is central to the debate over whether another product-level restriction is needed.
Retail Losses Are Falling, But The Problem Has Not Disappeared
The decline in total losses is significant.
However, average losses per trader increased from ₹1,13,913 to ₹1,16,654, according to government data.
This suggests that traders who remain active may be taking larger or more concentrated risks.
What The Data Shows
| Indicator | Direction |
|---|---|
| Number of retail traders | ↓ |
| Aggregate losses | ↓ |
| F&O turnover | ↓ |
| Average loss per trader | ↑ |
| Options concentration | Remains high |
| Expiry-focused activity | Remains high |
The data gives regulators a reason to continue experimenting with measures designed to reduce speculative activity.
Industry Reaction Could Be Mixed
Removing weekly expiries would have different consequences for different market participants.
Retail investors could benefit if it reduces impulsive expiry-day trading.
Brokers and exchanges, however, could face lower trading volumes.
Market makers could also need to adjust their strategies and liquidity provision.
Stakeholder Impact
| Stakeholder | Potential Impact |
|---|---|
| Retail investors | Lower access to ultra-short-term speculation |
| Long-term investors | Potentially positive |
| Brokers | Lower derivatives activity risk |
| Exchanges | Potential reduction in F&O turnover |
| Market makers | Strategy adjustment |
| Cash market | Potential increase in activity |
| Institutional traders | Shift toward other expiries |
The net market impact would depend heavily on how traders adapt.
Brokers And Exchanges Could Face Revenue Pressure
Weekly options generate substantial trading activity.
Brokerage platforms earn through transaction-related income, while exchanges earn fees from trading volumes.
A reduction in weekly expiry activity could therefore affect companies whose business models are heavily dependent on derivatives.
Angel One shares, for example, fell nearly 5% on Monday as investors assessed the reported proposal, while BSE also came under pressure.
Potential Market Impact
| Business | Risk From Weekly Expiry Removal |
|---|---|
| Retail brokers | Lower order volumes |
| Discount brokers | Lower derivatives activity |
| Stock exchanges | Lower F&O turnover |
| Market makers | Lower short-term volumes |
| Cash-market businesses | Potential upside |
However, investors could simply migrate from weekly contracts to monthly or other derivatives, limiting the ultimate revenue impact.
Monthly Options Could Become More Important
One possible consequence of eliminating weekly expiries would be a greater concentration in monthly contracts.
Instead of trading options that expire every week, participants could use longer-duration contracts.
That would potentially reduce the frequency of expiry-day speculation without eliminating options trading altogether.
Possible Market Structure
Current
Weekly expiry
│
├── Week 1
├── Week 2
├── Week 3
└── Week 4
Potential structure
│
▼
Monthly expiry
│
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Longer holding period
│
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Less frequent expiry-day activity
Whether this actually reduces losses would depend on trader behavior.
Critics Could Question Whether Restrictions Solve The Root Problem
Removing weekly expiries may reduce one form of speculation, but it may not eliminate risky behavior.
A trader who wants to take short-term leveraged positions could simply shift into monthly options or other products.
That raises a broader question: Should regulation target specific products or investor behavior?
Recent industry discussions have included suitability requirements, income thresholds and investor qualification tests as alternatives or complements to product restrictions.
Product Restrictions Vs Suitability Rules
| Approach | Potential Benefit |
|---|---|
| Remove weekly expiries | Directly reduces ultra-short-term contracts |
| Raise lot sizes | Increases minimum capital |
| Higher margins | Reduces leverage |
| Suitability tests | Targets inexperienced traders |
| Income thresholds | Limits participation by risk capacity |
| Investor education | Improves decision-making |
| Cash-market incentives | Encourages long-term investing |
A combination of these approaches could potentially be more effective than relying on one restriction alone.
SEBI Is Preparing More Detailed Retail F&O Analysis
SEBI Chairman Tuhin Kanta Pandey recently said the regulator would release a more granular study of retail and non-retail participation in derivatives trading.
The analysis is expected to examine who is trading, who is losing and how different participant categories are performing.
This could provide additional evidence for future policy decisions.
The new study is particularly relevant because policymakers need to distinguish between different types of derivatives participants rather than treating all retail traders as one group.
The Debate Is Shifting From Participation To Suitability
The earlier regulatory objective was largely to reduce excessive retail participation.
The latest debate is moving toward a more nuanced question: which investors should be trading complex derivatives, under what conditions, and with what level of risk?
That could eventually lead to greater suitability requirements.
Earlier focus
Reduce F&O participation
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Higher costs + fewer expiries
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Lower retail participation
Emerging focus
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Who should trade F&O?
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Suitability + risk assessment
│
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Targeted investor protection
This could become the next phase of India’s derivatives regulation.
The Bigger Picture
The reported proposal to remove weekly F&O expiries would represent another major step in India’s attempt to curb excessive retail speculation in derivatives. SEBI’s existing measures have already reduced individual participation from 98.1 lakh to 78.6 lakh and brought aggregate retail losses down to ₹91,685 crore in FY26. Yet average losses per trader increased, while 97% of index options trading remains concentrated within one week of expiry.
The proposal also comes at a sensitive moment for India’s market structure. The new Closing Auction Session has created a different price-discovery mechanism for the cash market, while derivatives continue to trade beyond the auction window. If weekly expiries are removed, the move could reduce the frequency of expiry-day speculation and potentially redirect some capital toward cash equities, but it could also reduce trading volumes and revenue for brokers and exchanges.
Looking Ahead
The most important point for investors is that weekly F&O expiries have not been officially abolished. The current development is a reported suggestion under consideration, with no confirmed implementation date or final framework. SEBI’s upcoming granular study on derivatives participation and losses could provide additional evidence before any further regulatory action is taken.
If the proposal eventually becomes policy, traders could shift toward monthly options, futures or the cash market. The effect on retail losses will depend on whether the change actually reduces speculative behavior or merely moves it into different products. For the broader market, the policy debate is increasingly moving beyond limiting derivatives access toward encouraging more sustainable long-term investing while preserving the hedging and price-discovery functions that F&O markets provide.
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