The NSE and BSE have changed the lot size of index derivatives. These updates will impact traders dealing in Nifty, Sensex, and other large indices. Reviewing lot sizes is a regular process to control risks and maintain smooth trading. Changes are made in response to market movements and variations in index values.
Recent updates aim to enhance market liquidity and facilitate smoother trading. Such actions may alter the amount of money required to initiate trading and the strategies employed for trading. Before trading, traders should look at the latest lot sizes. Being aware of index lot size changes helps you stay safe and plan your investments prudently.
Why Lot Sizes Matter in Index Derivatives
Every futures or options contract is fixed to a specific number of assets called the lot size. It sets the quantity of units of the index that are part of the contract in index derivatives. Adjusting the lot size you trade with can alter your trade value and margin.
The Role of Lot Size in Futures and Options (F&O) Trading
The smallest quantity of index units that can be traded in F&O trading is determined by lot size. For example, to trade in Nifty, you have to trade in multiples of 50. It is not possible to trade only one unit. Lot size controls the smallest and largest trade sizes you can make. If the index lot size changes, it also alters the degree of your exposure in the market.
How Lot Sizes Affect Contract Value and Margin Requirements
The index price multiplied by the lot size is the contract value. Contract value tends to be higher if the lot size is bigger. The margin requirement will be affected by this. When the lot size goes up, you are required to deposit more margin money. If the leverage goes down, you may invest in smaller trades. Keeping track of index lot size changes lets you plan your trades more effectively and closely monitor your risks.
Overview of SEBI’s Directive and Its Implications
The Securities and Exchange Board of India (SEBI) has introduced new rules to make the trading of high-risk derivatives less attractive to retail investors. The new directive from SEBI specifies the right contract size for index futures and options. SEBI’s emphasis on lowering excessive risk is reflected in the index lot size changes.
SEBI’s Target Contract Value Range
SEBI is of the view that the minimum contract value for index derivatives should be ₹10 lakh. Due to these conditions, traders will need to increase their funds to participate in trading. Older contracts had a smaller size, which made it simpler for more retail investors to access the markets.
The Objective Behind Curbing Retail Speculation
SEBI limits retail speculation to prevent significant losses to retail investors and rein in their enthusiasm. Many who trade using derivatives don’t realize the risks, so they commit large amounts. This can bring about financial concerns and shake up the market. SEBI aims to increase contract values to protect the market and ensure stable trading.
Lot Size Revisions: NSE vs. BSE
The NSE and BSE announced that the size of contracts under their index futures & options (F&O) is now bigger. The changes were undertaken on November 20, 2024.
Key Changes Introduced by NSE
Since the revision, NSE has increased the lot sizes for its leading indices. The lot size of futures and options for the Nifty 50 has been increased from 25 to 75, representing a threefold increase. Likewise, the Bank Nifty lot size has increased from 15 to 35.
Key Changes Introduced by BSE
BSE has additionally increased the sizes of lots to match the changes suggested by SEBI. Lot sizes for BSE Sensex 50 contracts have been increased to 75 from 60. However, lot sizes for BSE Sensex have remained the same at 20, while those for BSE Bankex contracts have remained the same at 30.
Consolidated Table of Lot Size Changes (November 2024 – July 2025)
SEBI made these amendments to offer better investor protection and enhance market stability by increasing the minimum contract value for index derivatives. For perspective, in 2023, the Brazilian exchange B3 traded 8.3 billion derivatives contracts, trailing the Mumbai-based NSE’s nearly 85 billion contracts.
| Index | Symbol | Exchange | Old Lot Size | New Lot Size | Effective From |
| Nifty 50 | NIFTY | NSE | 25 | 75 | June 27, 2025 |
| Nifty Bank | BANKNIFTY | NSE | 15 | 35 | June 27, 2025 |
| Nifty Financial Services | FINNIFTY | NSE | 25 | 65 | June 27, 2025 |
| Nifty Midcap Select | MIDCPNIFTY | NSE | 50 | 140 | June 27, 2025 |
| BSE Sensex | SENSEX | BSE | 20 | 20 | No change |
| BSE Bankex | BANKEX | BSE | 30 | 30 | No change |
| BSE Sensex 50 | SX50 | BSE | 60 | 75 | Apr 11, 2025 (for July 2025 expiry onwards) |
Source: icici direct
Impact by Contract Type: Weekly, Monthly, Quarterly
The new circular states that index lot size changes will be applied to different index derivative contracts. Any new contracts, whether they are weekly, monthly, quarterly, or half-yearly, follow these new changes.
Weekly Contract Revisions and Discontinuation
Currently, active contracts will be filled with the exact lot sizes until their expiry. All newly issued weekly agreements must follow the new lot sizes set in the circular. There will not be any updates to them until their expiry dates.
Transition of Monthly Contracts
Monthly expiry contracts will be handled in the same way. Existing contracts will remain unchanged. New Investor Agreements, signed after the change, will include the new Index Lot Size from the first month. Thus, investors do not face problems as they move to other positions.
Quarterly and Half-Yearly Contract Adjustments
The NSE has revised the market lot sizes for three of its key indices, Nifty 50, Nifty Bank, and Nifty Midcap Select, effective from June 27, 2025. All quarterly contracts available for trading from April 25, 2025 onwards will reflect these changes.
Strategic Impact on Market Participants
The new index lot size changes introduced by SEBI will significantly impact market participants. Such changes will influence how people trade, making participation in trading more expensive.
Increased Capital and Margin Burdens
The rise in lot sizes means traders have to put up more capital to join specific markets. For instance, if you currently want to buy an option on the Nifty 50 index with a premium of ₹100, you would pay ₹2,500 (₹100 times the 25 lot size). Additionally, merchants who previously traded by selling options and required around ₹70,000 in margin may now need more than ₹2,10,000. As a result, small investors might be forced out of the market.
Disruption to Short-Term Trading Strategies
The new rules will have a direct impact on traders who engage in short-term trading and conduct transactions on the same trading day. Solutions based on using less money and acting fast in business could no longer be effective. Because of the removal of calendar spread benefits and just one weekly expiry per exchange, traders are given less flexibility for short-term trades.
Shift in Liquidity and Potential Market Volatility
An increase in capital required may cause retail traders to reduce their involvement in the market. This could decrease the speed at which the market trades. A decline in liquidity often causes prices to fluctuate more during expiration periods.
Historical Perspective: Past Lot Size Adjustments
Index lot size changes are part of the development of the stock market. There were changes made in both liquidity and investor participation over time.
How Lot Sizes Have Evolved Over Time
When markets rose, the value of the contracts also increased. Because of this, trading volumes decreased. Regulators reduced lot sizes to attract more traders. With these modifications, more people were able to join the market. However, the SEBI has now proposed to increase the lot sizes to curb the enthusiasm of retail traders.
Lessons from Previous Contract Specification Revisions
Modifications to the index lot size in the past have shown valuable lessons. Since lots are smaller, the market is deeper, and entering is simpler. However, when the market becomes very small, this can encourage people to over-speculate. This means that people need to make choices carefully to maintain balance.
Navigating the New Landscape: Trader Recommendations
The new index lot size changes have necessitated the use of new strategies by traders. Adjusting to the latest market conditions helps you save money and maintain profits.
Reassess Risk and Position Sizing
Making larger trades means you are at greater risk for each position. Dealers should take a fresh look at their risk for each transaction. Don’t over-leverage your trades by trading conservatively. Don’t forget to apply stop-loss orders when you trade.
Reframe Strategies to Suit Larger Lot Sizes
New challenges may have made old ways of doing things ineffective. Since smaller lots are now a thing of the past, the strategy may need to be modified. Look for highly probable trading opportunities.
Stay Updated with SEBI and Exchange Circulars
Notice of these changes is given ahead of time. Keep yourself updated with the information provided by the SEBI and the exchanges.
FAQs
1. Why did NSE and BSE increase lot sizes for index derivatives?
The NSE and BSE increased market lot sizes of derivative contracts for various indices in alignment with the SEBI guidelines. These changes seek to ensure that contract values remain within an optimal range, facilitating efficient risk management for traders.
2. What are the new lot sizes for Nifty 50 and Bank Nifty contracts?
Nifty 50’s new lot size is 75 units, up from 25 in the past, and Bank Nifty’s new lot size is 35, up from 15. The revised lot sizes will be effective June 27, 2025. All quarterly contracts available for trading from April 25, 2025 onwards will reflect these changes.
3. How do these changes affect retail traders specifically?
Traders who operate in the retail market may need to commit more capital because trades are often larger, which can deter some from participating.
4. Which index derivatives now have weekly contracts?
The Nifty 50, Bank Nifty, and FINNIFTY currently offer derivatives that can be traded weekly. Flexibility, enhanced risk control, and numerous trading opportunities are some of the benefits traders find with short-term instruments.
5. Can I still trade the old lot sizes for open contracts?
Existing open contracts will remain in effect until they expire. All future agreements will reflect the new lot sizes as of the effective date. Positions need to be modified by traders at the time of rolling over contracts.
6. How does the lot size change impact margin requirements?
Trading larger lot sizes requires more funds for your margin, as contracts are valued at a higher amount. Traders often have to invest more money in each trade, which reduces their leverage and may discourage small-scale engagement.
7. Are similar changes expected for stock derivatives?
So far, the announced changes deal only with index derivatives. Because SEBI and exchanges closely monitor stock derivative contracts, the possibility of future lot size changes in stock futures or options cannot be ruled out.
8. How should I modify my strategy for the new lot sizes?
To adapt, you should adjust your capital utilization, the amount of risk you take per trade, and the size of each position. You could consider trading smaller quantities, opting for options rather than futures.
