How Scrapping Weekly F&O Expiries Could Reshape Retail Trading in India

• Retail F&O losses hit ₹91,685 crore in FY26 as 87.7% of traders lost money.
• About 59% of index-options turnover came from same-day expiry contracts in FY26.
• CAS turnover hit $4.1B on Aug. 31, nearly 40 times its post-launch average.

Scrapping Weekly F&O Expiries would change how Indian retail traders access short-duration derivatives, where activity remains concentrated near expiry. While some market participants have proposed removing weekly contracts, SEBI has neither proposed nor approved such a change. Even so, fewer expiries would materially affect users by changing trading frequency, capital allocation, and execution risk.

Weekly Options Concentrate Retail Risk Near Expiry

SEBI data show that 59% of index-options turnover in FY26 came from contracts expiring on the same day. Moreover, about 97% occurred within one week of expiry. Therefore, fewer weekly F&O expirations would reduce repeated opportunities to enter contracts approaching settlement and limit recurring events that attract short-term speculation.

That concentration becomes more significant when viewed alongside retail trading losses. Active individual derivatives traders fell 18% to 87.5 lakh in FY26, yet their aggregate net losses still reached ₹91,685 crore.

In addition, 87.7% of individual traders lost money, while options accounted for about 92% of total losses. Consequently, short-duration derivatives remain a key area of concern in retail trading in India. SEBI has already taken steps to reduce this exposure.

Since November 2024, each exchange has been restricted to offering weekly contracts on only one benchmark index. The regulator also increased contract sizes and introduced additional expiry-day margin requirements.

Removing weekly contracts would extend that shift by reducing the frequency of recurring margin commitments tied to short-duration positions. However, it would not automatically lower formal margin requirements for every trader, since participants could instead migrate toward longer-dated contracts.

As a result, some capital could move into monthly options, while supporters argue that part of it could shift toward cash equities. Either way, fewer weekly expiries would change how frequently retail traders recycle capital into short-duration bets and manage derivatives exposure.

CAS Volatility and Policy Headlines Raise Execution Risk

Beyond derivatives activity, India’s closing auction session (CAS) adds another consideration as it determines official closing prices for F&O-eligible stocks. SEBI says CAS should improve price discovery by aggregating liquidity. However, early sessions have also produced sharp indicative price movements.

For instance, on Aug. 27, the Sensex briefly indicated a 3.3% decline during CAS before ultimately closing 0.7% lower. Then, on Aug. 31, MSCI-related flows generated about $4.1 billion in NSE closing-auction turnover, nearly 40 times the average since CAS launched.

Individual stocks also experienced notable closing-price shifts. Reliance moved from a 0.6% pre-auction gain to a 0.8% closing loss. Consequently, retail orders entered near the close can receive materially different auction prices or remain unmatched when sufficient liquidity is unavailable.

Alongside these execution risks, policy reporting can also influence market sentiment. BSE’s derivatives business is particularly sensitive to expiry rules, as changes can affect trading volumes and related revenue expectations. However, sources clarified that scrapping Weekly F&O expiries remains a proposal from certain market participants rather than a SEBI decision.

For Indian users, therefore, fewer weekly expiries would extend beyond simply reducing short-term trading opportunities. They could shift more activity toward monthly options or cash equities, while CAS pricing and policy-related market reactions become increasingly important considerations for execution and capital allocation.

Related: SEBI May Tweak CAS: Are Indian Traders Struggling With Unpredictable Closing Prices?