Bombay Stock Exchange (BSE) is exploring steps to extend the tenure of its options segment, including a potential shift from weekly to monthly expiries for index contracts. If implemented, the move could have a significant impact on derivatives volumes across exchanges.
The regulatory change introduced in November 2024—allowing only one weekly expiry per exchange—had triggered a sharp migration of volumes from Bank Nifty to Sensex, pushing BSE’s premium turnover market share from 11.4% in October 2024 to 24.4% in September 2025. In addition, a large base of foreign portfolio investors (FPI) is still in the process of completing system setups after rack allocation.
This is expected to further accelerate trading activity and strengthen volumes in the coming months. The shift of expiry from Tuesday to Thursday (implemented in Sep’25) brought fresh flows, increasing non-expiry day share to the mid-teens and expiry day share to 50- 55%, albeit at the cost of a decline in Friday activity.
Enhanced broker engagement and the combined order book initiative are boosting execution quality and driving higher cash segment flows. BSE’s bulk deals capacity has risen sharply, from 30–40% earlier to 80–90%, while the exchange is leveraging its derivatives trading infrastructure to support cash activity.
However, despite this positive momentum, potential regulatory tightening in the F&O segment remains a key risk. This concern has contributed to a sharp correction in the stock, which is currently trading at 37x FY27E P/E. Our sensitivity analysis indicates that eliminating weekly expiries could reduce FY27 derivatives revenue/PBT by 35%/27%, translating into a 21% impact on FY27E EPS.
Given these elevated regulatory risks, we maintain a Neutral rating on BSE with a one-year target price of Rs 2,250.
BSE has clarified that the Motilal Oswal report mentioned that Sebi is considering measures to increase the tenure of the options segment and one of the measures could be shifting from weekly to monthly expiries for index contracts.