Introduction
The competition between the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) has taken a new turn, with both exchanges vying for dominance in the options market. The latest move by NSE to shift its F&O expiry day to Monday has raised eyebrows, particularly because it could directly impact BSE’s growing market share in derivatives.
The decision has already caused BSE’s stock to decline by nearly 9% intraday, while NSE remains unchallenged as the bigger player. But this fight isn’t just about expiry days—it’s about who controls India’s options trading landscape. Here’s everything you need to know.
NSE vs BSE: How the derivatives market rivalry is unfolding
On April 4, 2025, NSE will shift the expiry of all index and stock futures & options (F&O) contracts from Thursday to Monday. This move is expected to:
- Increase competition by placing NSE’s expiry a day before BSE’s Sensex expiry on Tuesday.
- Impact trading volumes for BSE, which sees peak activity on Mondays and Tuesdays.
- Force traders to adjust risk management due to potential weekend gap risks.
NSE’s decision comes after the Securities and Exchange Board of India (SEBI) mandated that each national exchange could list only one weekly index options contract. This rule led to NSE discontinuing its hugely popular Bank Nifty weekly options, which had accounted for 55% of its index options turnover.
Meanwhile, BSE had adjusted its index derivatives expiry to Tuesday from Friday in an attempt to attract more market share.
BSE’s growth in derivatives: Can it challenge NSE?
For years, NSE has dominated India’s derivatives market. However, BSE has been making significant strides in recent months. Here’s how:
| Timeframe | BSE’s Derivatives Market Share |
| FY23 | Less than 1% |
| FY25 (Current) | 26% |
This increase in BSE’s share is largely due to:
- SEBI’s push for a level playing field to reduce concentration risk on a single exchange.
- The regulatory cap on weekly expiries, which forced NSE to discontinue multiple contracts.
- Rising volumes in Sensex options, which attracted more traders to BSE.
However, with NSE’s new Monday expiry, BSE’s growth could slow down.
How the shift impacts traders and investors
1. Increased volatility risk
Traders who rely on weekly expiries for short-term strategies, such as one-day-to-expiry (1DTE) trades, will need to rethink their positions. Since markets remain closed over the weekend, Monday expiries introduce additional risks:
- Gap risk : unexpected market movements due to weekend news events.
- Higher volatility : as traders adjust positions in a shorter time frame.
2. Institutional vs. retail impact
Institutional traders can hedge their positions offshore through GIFT City or non-deliverable forwards (NDFs). However, retail traders will have fewer options, potentially leading to:
- More risk exposure.
- Higher trading costs due to increased volatility.
3. Potential impact on BSE’s share price
BSE stock has seen a multi bagger rally of 521% over three years and an 88% gain in the past year. However, since the announcement of NSE’s new expiry structure, BSE shares have taken a hit:
- Intraday low on March 6, 2025: ₹4,035.10 (9.39% fall).
- Closing price: ₹4,290 (-3.67%).
- Market cap: ₹58,076 crore.
Goldman Sachs has cut BSE’s target price from ₹5,650 to ₹4,230, citing concerns that the NSE move will slow BSE’s derivatives market expansion.
Will BSE respond with further changes?
Market experts believe that BSE may tweak its expiry schedule again to counter NSE’s Monday shift. Some potential responses include:
- Moving Sensex expiry to another day to avoid direct competition.
- Launching new derivative products to attract traders.
- Strengthening liquidity incentives to retain market participants.
For now, investors will be watching how trading volumes shift in April 2025 once the new expiry rules take effect.
Conclusion
The NSE vs BSE rivalry in the options market is only getting more intense. With NSE’s Monday expiry move, BSE’s recent growth in derivatives could face new challenges. Retail traders need to adapt to higher volatility, while institutional investors will likely find new hedging strategies.
The coming months will reveal whether NSE’s move will solidify its dominance or if BSE finds a way to fight back. Either way, traders must brace for a new era of market competition.
