The National Stock Exchange (NSE) on Tuesday said it has halved the lot size for trading derivatives contracts for the blue-chip Nifty 50 index to 25 and also reduced the lot sizes of the Nifty Financial Services and Nifty Midcap indices as part of its periodic revision.

“All contracts, i.e. weekly, monthly, quarterly, and half-yearly expires available for trading from the trade date of April 26, 2024, onwards will be with the revised market lot size,” the NSE said referring to applicability of the change for Nifty 50. 

The lot size in the derivatives segment refers to the fixed number of shares in a unit or group for which contracts are traded. For instance, if the lot size is 25, then contracts in that multiple can only be traded. The lot sizes are fixed based on stock price, liquidity, and risk.

Market experts said the reduction will lead to an increase in turnover and boost retail participation as the entry barrier will now halve.

“This will reduce its contract value from Rs 11.2 lakh to Rs 5.6 lakh and the margin requirement will also reduce to Rs 64,000 from the current Rs 1.28 lakh. This will increase the liquidity in the markets as traders with lesser capital will also now be able to take a position,” said Nilesh Sharma, Executive Director and President of Samco Securities.

For Nifty Financial Services, the lot size has been reduced from 40 to 25 while that of Nifty Midcap Select has been brought down from 75 to 50. The first monthly expiry contract to have the revised market lot for both these indices will be from July 2024.

The exchange has kept the lot size for the Nifty Bank unchanged at 15.

Last week, NSE revised the lot sizes for 54 stocks in the futures and options segment. 

The changes come at a time when the rival BSE is gaining market share in the derivatives segment.

First Published: Apr 02 2024 | 8:32 PM IST

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