NSE revises market lot sizes for derivative contracts on select indices
The National Stock Exchange (NSE) has announced an adjustment in the market lot sizes for derivative contracts on specific indices. These changes, set to take effect from April 25, 2025, will impact traders and investors engaged in Nifty Bank and Nifty Mid Select index derivatives.
Revised market lot sizes
As per the revision, the lot size for BANKNIFTY will rise from 30 to 35, while MIDCPNIFTY will increase from 120 to 140.
- This change is expected to alter trading strategies, as traders must adjust their positions to align with the new lot sizes.
- The lot sizes for major indices such as Nifty 50, Nifty Financial Services, and Nifty Next 50 will remain unchanged, ensuring stability in those segments.
Implementation timeline
The updated lot sizes will apply to new contracts beginning with the July 2025 expiry.
- Contracts expiring in April, May, and June 2025 will retain their existing lot sizes, minimizing disruptions for traders.
- Furthermore, all quarterly contracts introduced from April 25, 2025, onwards will adhere to the revised lot sizes, according to the NSE’s official note released on March 28, 2025.
Understanding derivatives and lot sizes
Derivatives are financial instruments whose value is based on an underlying asset, such as an index, commodity, or currency.
- Futures and options (F&O) are the most commonly traded derivatives, allowing investors to speculate on price movements or hedge risks without directly owning the asset.
A lot size refers to the minimum number of units that must be bought or sold in a single derivative contract.
- Since derivatives operate on leverage, traders do not need to pay the full contract value upfront.
- The lot size determines both the exposure level and the margin requirements, impacting overall trading strategies.
Trading adjustments and order book changes
To ensure a smooth transition, the day spread order book will be unavailable for specific contract combinations.
- Traders will not have access to the May 2025 – July 2025 and June 2025 – July 2025 spread orders during the transition period.
- This measure aims to maintain liquidity and efficiency while market participants adapt to the changes.
These revisions in lot sizes mark a significant shift for derivative traders, requiring adjustments in trading volumes and risk management approaches.
