Shares of BSE Limited gained nearly 2 percent in morning trade on March 5 after the exchange disclosed that it had received approval from the Securities and Exchange Board of India to introduce derivative contracts based on the BSE Sensex Next 30 index. The regulatory clearance marks another step by the exchange to expand its derivatives product ecosystem and attract broader institutional and trading participation.

According to the exchange’s regulatory filing after market hours on March 4, BSE plans to introduce cash settled monthly index futures and monthly index options on the Sensex Next 30 index. The contracts will follow the standard expiry framework used in Indian index derivatives, with expiry scheduled on the last Thursday of the contract month. Details regarding the launch timeline for the new futures and options contracts have not yet been disclosed.

The Sensex Next 30 index tracks the next set of large and liquid companies in the BSE 100 universe that are eligible for derivatives trading but are not part of the flagship Sensex 30 index. In effect, the index represents the immediate layer of companies that could potentially graduate into the benchmark index in the future. By creating derivatives on this segment, BSE is attempting to broaden trading opportunities beyond the core benchmark while providing investors with additional tools for hedging and speculative positioning.

Market participants often view such index derivatives as important instruments for price discovery and risk management. Futures and options linked to broader market indices enable investors to hedge portfolio exposure to mid tier large caps or take directional bets on the performance of specific segments of the equity market. The Sensex Next 30 index sits between the flagship benchmark and the broader large cap universe, potentially making it a useful proxy for traders looking to capture movement in emerging large caps.

At around 9:27 am on March 5, shares of BSE were trading about 2 percent higher at roughly Rs 2,674 apiece. The broader market also opened with a positive bias, which supported the stock’s early gains. The rise in BSE’s share price reflects investor expectations that expanding the derivatives portfolio could help the exchange gradually improve volumes and market share in the competitive F&O segment.

Currently, BSE already offers derivatives contracts on the flagship Sensex index, including both weekly and monthly expiries. In addition, it provides derivatives linked to Sensex 50 and BANKEX indices with monthly expiry cycles. The introduction of Sensex Next 30 derivatives therefore adds another layer to the exchange’s product basket and aligns with its broader strategy of building liquidity across multiple index contracts.

The development also comes after an industry wide adjustment in derivative contract expiries last year. BSE shifted the expiry of its derivative contracts from Tuesday to Thursday, while the rival exchange moved to Tuesday expiries for its own contracts. This separation was intended to avoid direct overlap in expiry days and potentially create distinct liquidity pools across exchanges.