In response to the Securities and Exchange Board of India’s (SEBI) directive to increase the lot size of derivatives contracts to a minimum value of ₹15 lakh, the National Stock Exchange (NSE) has raised the lot sizes for its five key index derivative contracts. The change will impact the Nifty50, Nifty Bank, Nifty Financial Services, Nifty Midcap Select, and Nifty Next50 indices.
According to an NSE circular, this adjustment will be applicable for all new index derivatives contracts (including weekly, monthly, quarterly, and half-yearly contracts) starting from November 20, 2024.
The most significant changes include a 3x increase in Nifty50’s lot size—from 25 to 75 contracts—and a doubling of Nifty Bank’s lot size, from 15 to 30 contracts. The lot size for Nifty Financial Services, commonly referred to as Fin Nifty, will rise from 25 to 65, while Nifty Midcap Select will see its lot size jump from 50 to 120 contracts.
NSE further clarified that existing weekly and monthly expiry contracts will continue with their current lot sizes until they expire. For quarterly and half-yearly contracts, the transition to the new lot sizes will occur at the end of the trading day on December 24, 2024, for Nifty Bank, and December 26, 2024, for Nifty.
Earlier in October 2024, SEBI announced a six-step framework to tackle the growing concerns about retail investors losing money in the high-risk futures and options (F&O) segment. As part of these reforms, SEBI raised the minimum contract size for index futures and options from the current range of ₹5-10 lakh to ₹15 lakh. The revised lot sizes will ensure that the contract value of a derivative remains between ₹15 lakh and ₹20 lakh, based on market conditions.
SEBI stated that the recalibration of contract sizes is crucial, given the inherent leverage and risks associated with derivatives trading. This move, the regulator said, is intended to maintain the suitability and appropriateness criteria for market participants while accounting for the overall growth of the market.
The phased implementation of SEBI’s new rules begins on November 20, 2024, with the aim of mitigating the financial risks faced by retail investors and ensuring a more structured approach to F&O trading in India.