The Securities and Exchange Board of India, or SEBI, may consider a major change in the futures and options market. The regulator is reported to be looking at the removal of weekly expiry contracts as it tries to reduce large losses among retail traders.
The issue has gained fresh attention after data showed that retail traders still face very large losses in equity derivatives. The move would mark another step in SEBI’s effort to make the F&O market less speculative and less risky for small investors.
The idea is not yet a final SEBI decision. It is a proposal under discussion, and the final rules may differ from what is now reported.
Why Weekly Expiry Has Become a Concern
Weekly options give traders contracts that expire within a very short period. This allows them to take quick trades with limited upfront capital. For many retail traders, this can look attractive because the option price may be much lower than the cost of buying the underlying index or stock.
But the same feature can create a high-risk market.
As expiry comes close, the value of many options can fall very fast. A trader who buys an option can lose most or all of the premium if the market does not move in the expected direction. A small price move in the wrong direction can also hurt option sellers who take large positions.
Weekly expiry can create a strong focus on very short-term bets. Traders may enter and exit several positions in a single session. For a person with limited experience, this can turn the F&O market into a place for repeated bets rather than a tool for proper risk management.
SEBI has already taken steps to reduce this activity. From November 20, 2024, exchanges were allowed to offer weekly expiry contracts for only one benchmark index per exchange. NSE kept weekly expiry for the Nifty 50, while BSE kept it for the Sensex. Weekly contracts for several other major indices were stopped.
Retail Losses Have Fallen, But the Problem Remains
Recent official data shows why SEBI continues to focus on this area.
Retail investors had net F&O losses of ₹91,685 crore in FY26. This was lower than the ₹1.12 lakh crore loss in FY25.
The number of individual traders also fell from 98.1 lakh to 78.6 lakh during the same period.
At first, these numbers appear positive. Fewer retail traders took part in the market, and total losses also fell.
However, one number raises a fresh concern. The average loss per trader increased from ₹1.14 lakh to ₹1.17 lakh.
This means the people who remained in the market still faced very large losses. A lower total loss does not automatically mean that retail traders have become safer or more successful.
Equity derivatives turnover also fell from ₹213 trillion in FY25 to ₹202 trillion in FY26.
These figures show that earlier SEBI rules have had an effect. Yet the regulator may believe that more action is needed.
What SEBI Has Already Changed
SEBI has made several changes to the F&O market since late 2024.
The regulator has raised the minimum contract size for index derivatives. It has also added stronger risk cover for expiry day. Brokers must collect option premiums upfront from buyers, and exchanges have to check position limits during the day.
SEBI has also removed certain benefits for calendar spreads on expiry day. It has changed the structure of weekly index derivatives and made changes to monthly index contracts.
In March 2025, SEBI proposed a more organised expiry structure. The proposal said each exchange could continue to offer one weekly benchmark index option, while other equity derivative contracts would have a minimum tenor of one month.
The latest idea to remove weekly expiry would go further than those earlier steps.
How Removing Weekly Expiry Could Help
The main aim would be to reduce the number of very short-term trading opportunities.
With fewer weekly contracts, traders may have fewer chances to place repeated bets based on small market moves. The market could shift more towards monthly contracts, where traders have more time before expiry.
That may reduce the pressure for constant short-term trades.
It could also make it harder for new traders to treat options as a quick way to make money. The absence of weekly expiry would not remove risk from F&O, but it could reduce one part of the market that has made rapid option trading very popular.
For SEBI, the larger goal appears to be investor protection. The regulator wants retail traders to understand that derivatives can produce large losses and should not be treated like simple stock trades.
But Weekly Expiry Also Has Benefits
Removing weekly contracts would not be without problems.
Weekly options have become an important part of India’s derivatives market. They provide traders with more choices and can offer useful tools for hedging. Traders who use options to protect a portfolio may also depend on short-duration contracts.
Weekly contracts can also provide strong liquidity because many buyers and sellers take part in them. If that activity shifts to fewer monthly contracts, some parts of the market could see lower liquidity.
For traders, this may lead to wider differences between the price at which they can buy and sell an option. Trading costs could rise in some cases.
Professional traders and institutions may also need to change their strategies. Many options strategies depend on a particular expiry cycle. A change in the expiry calendar can affect hedging, risk control and pricing.
So, the removal of weekly expiry may reduce some risks while creating new costs for other market participants.
What It Could Mean for Retail Traders
For retail traders, the impact could be significant.
A trader who prefers quick option trades may have fewer instruments to use. Monthly options could become the main choice for index option trades.
However, this does not mean retail losses would disappear.
A trader can still lose a large amount in monthly options. In fact, a longer expiry can give an option more time value and may require a larger premium. Leverage and poor risk control can remain serious problems.
The bigger change may be in trader behaviour. With fewer expiry dates, traders may place fewer trades and have more time to assess their positions.
That would fit SEBI’s broader aim of reducing highly speculative activity rather than simply reducing the number of people who trade.
What It Means for Brokers
A major change in weekly expiry could also affect stock brokers.
Brokers earn revenue from trading activity. Retail F&O traders have become an important part of this business because they trade often.
If weekly expiry disappears, the number of short-term trades could fall. That may reduce revenue for brokers that rely heavily on F&O activity.
Angel One shares, for example, fell nearly 5% on August 31 amid concerns over the reported proposal.
The effect would not be the same for every broker. Companies with a wider mix of products and services may face less pressure than firms that depend heavily on active derivatives traders.
What It Means for Stock Exchanges
Stock exchanges could also face an impact.
F&O activity has become a major source of business for India’s exchanges. A reduction in weekly contracts could lower trading volumes and affect transaction-based revenue.
The wider effect would depend on what traders do after the change. If much of the weekly activity moves to monthly contracts, the fall in total activity may be smaller.
If traders leave the derivatives market altogether, the effect could be much larger.
This is why the proposal matters not only to traders but also to the wider market ecosystem.
The Bigger Question for SEBI
The central question is whether weekly expiry is the main reason behind retail losses.
The latest data suggests that SEBI’s earlier measures have reduced total retail losses. Yet the average loss per trader has gone up.
That tells us that the problem may be larger than expiry dates alone.
Trader behaviour, leverage, lack of knowledge, repeated trades and poor risk control can all contribute to losses. Even if weekly expiry ends, these issues will remain.
The regulator therefore faces a difficult balance. It must protect small investors without making the derivatives market less useful for genuine hedging and risk management.
What Happens Next
For now, traders should treat the removal of weekly F&O expiry as a possible regulatory change, not as a final rule.
SEBI is likely to study the effect on retail traders, liquidity, brokers, exchanges and the overall derivatives market before any final move.
The regulator has already shown that it is ready to change the structure of F&O trading when it sees a risk to retail investors. Its earlier steps have reduced retail participation and total losses, but the high average loss per trader shows that the problem is far from solved.
If weekly expiry does disappear, India’s F&O market would enter another major phase of change. The immediate effect could be lower short-term speculation and fewer rapid-fire trades. But the real test would come later: whether retail traders actually lose less money, or simply move their risky bets to a different part of the derivatives market.
For SEBI, that outcome will matter far more than the expiry calendar itself.
ALSO READ: US Targets Iran Shadow Banking With New Bank Sanctions
