Can you please tell me about the latest NSE circular regarding the reduction of Nifty weekly contracts on BANKNIFTY from seven to four?

On 22nd December 2021 the NSE issued a circular reducing the number of weekly option contract expiries from 7 consecutive expiries to 4 consecutive expiries. This reduction will only be applicable for the pure weekly expiries and not weekly-cum-monthly expiries. As you would be aware, at any point, there are 7 independent weekly expiries and 3 weekly-cum-monthly expiries for BANKNIFTY. The 7 pure weekly expiries will be cut to 4.

The entire process will be time bound and done in a phased manner to avoid disruptions to traders and hedgers. This reduction in weekly contracts will be done in a phased manner starting from 21-Jan i.e. the day after the 20-Jan weekly expiry of BANKNIFTY. However, during this period, all the existing open contracts and positions on BANKNIFTY will not get impacted and they will continue as they are till their relevant date of expiry.

In the second phase of this contract wind-down i.e. between 21st January 2022 and 03rd March 2022 the NSE will not introduce any fresh weekly expiries or even weekly-cum-monthly expiries on the Bank Nifty. This will give enough time to play catch up with the new system. Finally, in the last phase effective from 04-March, the cycle of 4 consecutive weekly contracts will commence and will be effective thereafter.

To sum it up, there will be 2 important cut-off dates i.e. the day after 20th Jan expiry and the day after 03rd Mar expiry for the BANKNIFTY. On 21st January, there will be a total of 7 weekly contracts and 2 monthly contracts on the BANKNIFTY that will be open. Since no fresh contracts will be added between 21st Jan and 03rd Mar, there will just be 3 weekly contracts on 04-March. From then on the cycle of 4 contracts will commence.