The National Stock Exchange of India (NSE) is set to revise the market lot size of its key index derivative contracts effective December 30, 2025. This action aligns with periodic reviews intended to comply with guidelines set forth by the Securities and Exchange Board of India (SEBI).
Specifically, the lot size for Nifty 50 derivatives will decrease from 75 to 50, while the Bank Nifty will reduce from 35 to 30. The Nifty Financial Services contract will be adjusted from 65 to 60, and the Nifty Midcap Select will change from 140 to 120. The lot size for Nifty Next 50 will remain unchanged at 25, as indicated in the circular.
“In pursuit of SEBI guidelines for the periodic revision of lot size for derivatives contracts specified in the SEBI circular… dated December 2024, the market lot of derivative contracts on the following indices shall be revised,” noted the exchange in its announcement.
Contracts created after December 30 will adopt the new lot sizes, while existing quarterly and half-yearly contracts will maintain their original sizes until expiration. The first contracts reflecting the new sizes are expected to expire in January 2026.
Revisions to lot sizes are common as exchanges periodically adjust contract sizes to keep notional exposure manageable for traders, especially in light of rising underlying indices. Due to elevated valuations in recent years, many standard derivative contracts have high notional values, which may limit participation from smaller traders.
This adjustment occurs amid recent moderation in derivatives trading volumes. After a surge in late 2023, index futures and options turnover has declined since November 2024 due to stricter margin regulations, reduced weekly expirations, upfront premium collections, and recent incidents, including the Jane Street situation.
Since December 2024, index options’ notional turnover has decreased by approximately 30%, alongside a 10% drop in terms of premiums. Additionally, the number of unique retail participants in the derivatives market has fallen by 20% in FY25 compared to the previous year.
For smaller traders, the reduced lot sizes may lower capital thresholds, enhancing accessibility to index derivatives. Conversely, intermediaries and algorithmic traders will need to reconfigure their systems and recalibrate their strategies. Market participants are also anticipating that the Bombay Stock Exchange (BSE) will align its lot sizes with those of the NSE to remain competitive.
Published on October 4, 2025.
