Sebi directive: Regulator sets timeline for derivatives rejig on Bankex, BankNifty, and FinNifty; move to deepen sectoral representation

Markets regulator Sebi on Thursday issued fresh guidelines directing stock exchanges to realign eligibility norms and composition criteria for derivatives on non-benchmark indices such as Bankex, FinNifty, and BankNifty.According to the circular, exchanges will need to revise the composition and weights of these indices within specified timelines, PTI reported. The adjustment for Bankex and FinNifty must be completed in a single phase by December 31, 2025, while BankNifty will undergo changes in four monthly phases to be completed by March 31, 2026. The phased approach, Sebi said, will help ensure smooth rebalancing of index-tracking funds.The move aims to enhance market efficiency, improve representation of the banking and financial sectors, and create more diverse opportunities for investors and traders.Under the revised eligibility norms, any non-benchmark index seeking derivatives trading must have a minimum of 14 constituent stocks. The weight of the largest stock cannot exceed 20%, the top three stocks together must stay within 45%, and the remaining constituents must follow a descending weight order based on their size.Sebi has also instructed stock exchanges and clearing corporations to upgrade their systems, issue advance notices to market participants, and ensure compliance with the new framework within the given deadlines.