Sebi's Proposed Expiry Rule May Derail MSEI Revival Plan

The exchange's strategy to carve out a niche with SX40 contracts may no longer be viable

- Srushti Vaidya

Mumbai-based stock exchange's revival efforts have hit a roadblock after markets regulator, Securities and Exchange Board of India (Sebi), proposed to cap index derivative expiries to two days a week.

In December 2024, the Metropolitan Stock Exchange of India (MSEI) raised ₹238 crore from broking firm Groww's parent Billionbrains Garage Ventures, Zerodha's Rainmatter Investments, Share India Securities, and Securocorp Securities India. The bourse planned to offer a derivative contract for its flagship SX40 index. All National Stock Exchange Ltd's derivatives expire on Thursday, BSE Ltd's on Tuesday, and the MSEI had set Friday expiry for its SX40 contracts.

The exchange offers trading but generates modest daily volumes of 30,950 on 5 May. By contrast, NSE's cash trading volumes on 5 May stood at 293.72 crore, while for BSE it was 58.59 crore. MSEI was betting that an independent derivative expiry day would help it gain some market share from NSE and BSE.

Sebi's plan could thwart MSEI's bid to position itself as an alternative to its established and big rivals, experts said. "It is highly unlikely that Sebi will allow a separate day expiry for MSEI because then it circumvents Sebi's original plan to reduce the number of weekly expiries," said a broker on the condition of anonymity. If the exchange does not get a separate expiry day, it will have no economic value, the broker said.