The National Stock Exchange of India (NSE) is actively working to diversify its product portfolio and reduce its reliance on weekly options following regulatory changes by the Securities and Exchange Board of India (SEBI). Ashishkumar Chauhan, MD and CEO of NSE, stated that while the exchange initially anticipated a 50-60 percent decline in volumes and revenues due to SEBI's derivative tightening, the actual impact was significantly lower, with a drop of only around 3 percent in 2025-26. Weekly options currently contribute about 42 percent to NSE's total revenue, a decrease from previous levels, with the remaining 58 percent coming from equities, equity futures, and monthly options. Chauhan expressed that NSE has no objection to SEBI's regulatory decisions aimed at investor protection and believes that tougher regulations ultimately make markets safer and more trustworthy.
NSE is expanding into new market segments and products to drive diversification. Chauhan highlighted the success of electricity futures, which command a 70-75 percent market share since their launch last year. He also sees Electronic Gold Receipts (EGRs), which currently hold almost the entire market share, as a potentially "transformational product" that could open doors for future offerings. While newer revenue streams like index revenues, market data, and terminal services are growing faster, they remain smaller contributors to the overall business.
Despite the regulatory crackdown, NSE maintains a dominant position in India's derivatives market, holding a 99.72 percent share in equity futures and 68.48 percent in equity options. Chauhan believes that regulatory interventions make markets safer and will support further growth, ultimately increasing investor participation. He noted that India has only 130 million unique individual investors, indicating significant headroom for market expansion. NSE Chairman Srinivas Injeti echoed this sentiment, emphasizing the necessity of regulatory interventions to protect retail investors, many of whom have incurred losses in the derivatives market, with SEBI research showing 9 out of 10 individual traders losing an average of approximately 128,000 rupees ($1,535) annually.
The regulatory changes have also impacted market share dynamics. While NSE still handles almost 80 percent of total derivatives contracts, its monthly options premium turnover dropped more than 40 percent through August from October, just before the curbs started. This has created opportunities for competitors like BSE Ltd., which has seen its share of index contracts on expiration days rise to 50 percent or more from a low of 35 percent in April. The shifting of expiration days, with NSE choosing Tuesdays and BSE taking Thursdays, has also played a role in BSE's gains, with analysts at HDFC Securities anticipating further market share gains for BSE due to this change. However, Chauhan remains confident that a safer, more trustworthy market will attract more investors and ensure continued growth for NSE in the long run.
