SEBI’s Crackdown on Weekly Options Expiry: What It Means for NSE Share Price and Unlisted Investors

 The National Stock Exchange (NSE), India’s largest and most influential stock exchange, is once again in the spotlight following SEBI’s proposed reforms to curb excessive speculation in the options trading market. The move to potentially ban weekly options expiry, including for the Nifty 50 index, could have far-reaching implications for NSE unlisted shares, NSE share price, and the much-awaited NSE upcoming IPO.

This article dives deep into the background of SEBI’s regulatory actions, their impact on NSE’s business model, and what pre-IPO investors should know before the NSE IPO finally hits the market.

 

Background: SEBI’s 2024 Rule – One Index, One Weekly Expiry

In November 2024, SEBI introduced a landmark rule allowing only one benchmark index per exchange to have weekly derivatives contracts.

This meant that Bank Nifty, FinNifty, and Midcap Nifty all lost their weekly expiry options. The Nifty 50 index was the only one retained for weekly expiry trading.

The primary goal of this reform was to reduce speculative trading and tame volatility in short-term options markets. Weekly options had become extremely popular among retail traders seeking quick profits, often leading to excessive intraday volatility and system-wide risk.

 

SEBI’s Next Move: Full Ban on Weekly Options

In 2025, reports suggest SEBI and the Finance Ministry are considering the next major reform — a complete ban on weekly options, even for Nifty 50.

The proposed changes include:

• Eliminating weekly options contracts across all indices, moving instead to bi-monthly or monthly expiries.
• Reducing margin requirements in the cash equity segment to encourage delivery-based trading.
• Lowering the Securities Transaction Tax (STT) to promote long-term equity investment.
• Shifting focus from speculative trading to long-term wealth creation.

This transformation aims to create a more balanced market ecosystem, driving participation from serious investors rather than short-term speculators.

 

Impact on NSE’s Revenue and Profitability

One of the most significant consequences of this regulatory change lies in NSE’s revenue model. A large share—nearly 60–70% of NSE’s revenues—comes from transaction charges, primarily generated from derivative contracts.

Short-Term Impact on NSE Share Price and Earnings

If weekly options are discontinued:

• Derivatives trading volumes will likely fall sharply.
• Transaction-based income may decline, affecting short-term revenue.
• Reduced volatility may discourage high-frequency and speculative trading, further tightening NSE’s margins.

Consequently, in the near term, NSE’s earnings could face pressure, potentially impacting the NSE unlisted share price in the pre-IPO market.

However, this short-term dip may open a strategic buying opportunity for investors looking to accumulate NSE unlisted shares before the NSE IPO.

 

Potential Long-Term Benefits: A Stronger, Healthier Market

While SEBI’s crackdown may appear restrictive, its long-term implications could strengthen India’s financial market structure and enhance NSE’s credibility globally.

1. Encouraging Fundamental Investment

Reducing STT and margin requirements in the cash segment will make equity trading more cost-effective. This move can attract retail and institutional investors to long-term, delivery-based investing — a positive for overall market health.

2. Greater Market Stability

With fewer speculative trades, markets could witness reduced volatility and more stable price movements, allowing serious investors to make data-driven decisions.

3. Diversification of NSE’s Revenue Streams

In the long run, this reform can encourage NSE to diversify its revenue sources beyond derivatives. Possible growth areas include:

• Equity trading fees
• Listing revenues from new IPOs
• Data analytics and technology services

Such diversification could ultimately support a steady rise in NSE’s valuation, benefiting long-term shareholders and pre-IPO investors.

 

Impact on NSE Unlisted Shares and Pre-IPO Investors

For those tracking NSE unlisted shares, SEBI’s move introduces a short-term challenge but a long-term advantage.

Time Frame	Impact on NSE	Effect on NSE Unlisted Shareholders
Short-Term	Fall in trading volumes and revenues	Temporary correction in NSE unlisted share price
Long-Term	Stronger fundamentals and diversification	Improved valuation and investor confidence

The temporary dip in unlisted share prices may offer a golden entry point for investors looking to buy NSE pre-IPO shares before public listing. Historically, companies with strong fundamentals rebound strongly once structural reforms stabilize.

 

Earnings Sensitivity to Derivatives Trading

The National Stock Exchange’s profits are heavily dependent on trading activity within its derivatives segment. Any major regulatory change — like a weekly options ban — directly impacts its short-term performance.

However, NSE’s diversified business model, backed by high cash reserves and robust institutional frameworks, ensures it remains resilient. The exchange’s leadership in technology, risk management, and product innovation further mitigates downside risks.

 

Valuation Volatility and Market Sentiment

Unlisted shares are generally less liquid than listed stocks. Hence, news like SEBI’s ban can trigger sharp short-term valuation fluctuations.

Still, seasoned investors view such corrections as natural price adjustments rather than long-term threats. With NSE’s dominant market share (over 90% in equity derivatives), it continues to be a blue-chip investment opportunity in India’s pre-IPO landscape.

 

Regulatory Risk Already Priced In

Experts believe that the possibility of SEBI’s intervention has already been factored into current valuations of NSE unlisted shares. Therefore, any future volatility might be limited, unless SEBI introduces unexpected structural restrictions beyond weekly expiries.

This stability adds confidence for investors planning to hold NSE shares through the upcoming IPO, expected in the next 12–18 months.

 

Long-Term Outlook for NSE Pre-IPO Investors

Despite short-term turbulence, NSE’s long-term growth story remains intact. The exchange is strategically positioned to capitalize on:

• Rising retail participation in equity markets
• New product launches in commodities, ETFs, and bonds
• Digital innovation and global partnerships

These factors could help restore momentum in the NSE share price, making it one of the most valuable publicly traded exchanges in Asia once the NSE IPO is launched.

 

Final Thoughts

SEBI’s efforts to ban weekly options expiry mark a turning point in India’s derivatives market. While short-term headwinds may impact NSE’s revenue and unlisted share price, the broader picture suggests a healthier, more stable financial ecosystem.