The National Stock Exchange (NSE) has announced changes in the lot sizes for trading derivatives contracts. The revised lots will take effect on April 26. The revised changes in NSE lot size apply to the Nifty 50 index contract, Nifty Financial Services (FINNIFTY), and Nifty Midcap Select (MIDCPNIFTY).
Key Highlights| Revised Market Lot of NSE Futures and Options Contracts
- NSE halves the lot size for trading derivatives contracts for the Nifty 50 index to 25.
- Lot sizes for Nifty Financial Services (FINNIFTY) have been reduced from 40 to 25, and for Nifty Midcap Select (MIDCPNIFTY) from 75 to 50.
- The lot size for contracts of Nifty Bank (BANKNIFTY) remains unchanged.
- All Nifty contracts available for trading from April 26 onwards will adhere to the revised market lot size.
- There will be no revision in the market lot for existing monthly expiries for Nifty Financial Services and Nifty Midcap Select until July 2024.
Market Lots
In the stock market, lot size means how many shares you buy at once. In options trading, it is the total number of contracts in one derivative security. It relates to a specific stock or derivative contract. Lot size helps set prices and makes trading a standardised process.
As per the recent NSE circular, below are the changes introduced:
Latest Revision in The Market Lot Size of NSE Derivatives
Following SEBI guidelines for periodic lot size revisions for derivatives contracts, NSE revises the market lots of three contracts.
Here are the updated market lots of NSE derivatives:
- NIFTY 50
- Present Market Lot: 50
- Revised Market Lot: 25
- NIFTY FINANCIAL SERVICES (FINNIFTY)
- Present Market Lot: 40
- Revised Market Lot: 25
- NIFTY MIDCAP SELECT (MIDCPNIFTY)
- Present Market Lot: 75
- Revised Market Lot: 50
- The lot size for Nifty Bank (BANKNIFTY) remains unchanged at 15.
Implementation Date and Expiry Details
Starting from April 26, all Nifty contracts expiring weekly, monthly, quarterly, and half-yearly will follow the revised lot sizes.
However, there is no change in the market lot for the monthly expiry in April 2024, expiring on April 25.
Latest Rules Related To NIFTY 50 Derivatives
- NSE makes no revisions to the market lot for the monthly expiry of April 2024, which expires on April 25, 2024.
- All contracts, including weekly, monthly, quarterly, and half-yearly expiries, available for trading from April 26, 2024, onwards, will feature the revised market lot size.
- Any new contracts generated after the end of the day on April 25, 2024, will have the revised market lot size.
- The first weekly expiry contract with the revised lot size expires on May 2, 2024.
- The first monthly expiry contract with the revised lot size expires on May 30, 2024.
Latest Rules For NIFTY FINANCIAL SERVICES Index Derivatives
- Change is not applicable for the Nifty lot size for existing monthly expiries, which are expiring on April 30, 2024, May 28, 2024, and June 25, 2024.
- The first monthly expiry contract with the revised market lot will be the July 2024 expiry, which expires on July 30, 2024.
- There are no revisions in the market lot for weekly contracts with expiry dates up to July 23, 2024.
- All Weekly Contracts with maturities from August 2024 onwards (i.e., weekly contracts with expiry dates from August 6, 2024, onwards) will have revised market lots.
Latest Rules For NIFTY MIDCAP SELECT Index Derivatives
- There is no change in the NSE market lot for existing monthly expiries ending on April 29, 2024, May 27, 2024, and June 24, 2024.
- The first monthly expiry contract with the new market lot will be in July 2024, ending on July 29, 2024.
- No changes apply to the market lot for weekly contracts expiring up to July 22, 2024.
- All Weekly Contracts expiring from August 2024 onwards will have new market lots.
What Does This Latest Revision in NIFTY Lot Size Mean For Investors?
The recent update from the National Stock Exchange (NSE) regarding the revision of NSE lot sizes for future and options contracts would mean:
1. Reduced Capital Requirement
Smaller NSE lot sizes mean that traders can enter the market with a lower capital outlay. This makes derivatives trading more accessible to a broader range of investors.
2. Increased Flexibility
With the reduction in lot sizes, traders have more flexibility in managing their investment sizes.
3. Enhanced Liquidity
Smaller lot sizes can potentially increase the liquidity of the derivatives market, as more traders may participate due to the lower cost of entry.
4. Risk Management
The latest reduction in lot size of NSE future and option contracts will allow you to take smaller positions in the market.
Conclusion
These revisions by NSE aim to enhance trading efficiency and liquidity in derivative contracts. Thus providing wider opportunities for investors to participate in the market.
Source– https://nsearchives.nseindia.com/
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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.