Revision in Market Lot of Derivative Contracts on Unit Indices

Effective after December 30, 2025 (end of day), the exchanges will revise the lot sizes of key index derivative contracts, including quarterly and half-yearly contracts. The adjustments will be carried out after the close of trading. These changes have been implemented to ensure compliance with regulatory limits on the monetary value of a single derivative contract.

Through this blog, we will explore what are the changes, what is the rationale behind this move, and how broking houses are enabling their customers make the transition.

What are the new lot sizes?

Weekly and monthly contracts that expire on or before December 30, 2025, will continue under the same lot sizes, making it easy to identify the end of legacy trading. All contracts that expire on December 30 or after that will now have new, lower lot sizes for NIFTY 50(75), Bank Nifty (35), FinNifty (65 to 60), and Midcap Nifty (140 to 120), while Nifty Next 50 remains unchanged at 25.

As per the NSE circular, the new lot sizes are determined using the average closing price of the underlying index over a one-month period in September 2025, ensuring the contract values remain aligned with regulatory risk controls.

Why is this happening?

SEBI’s regulatory framework revises the index derivative lot sizes to keep the notional value of a single derivatives contract within defined limits. When index levels rise over time, the contract values automatically increase even if lot sizes remain unchanged which ultimately can make the investors participation more investment heavy and can increase potential losses.

Position Adjustment Risks for Holders

For those who have long option positions in the quarterly or half-yearly contracts that expire on or after March 2026, you need to adjust your position to reflect the new lot sizes by December 30. Otherwise, you run the risk of being unable to square off your position and may be forced to hold your position until expiration.

A long option holder whose position is not aligned could have their position become worthless if not recreated correctly, which may result in an immediate sell-off of the non-compliant holding. Brokers have been instructed to inform their clients of this so that they can avoid any potential losses.

For short option positions, traders with short option positions that are already aligned with a lower lot size can continue to trade as usual. However, traders with a short option position that is not aligned with the lower lot size run the risk of having their position squared off starting December 30. This allows for the protection of margins after the implementation of the new, lower lot sizes.

What broking houses are doing about this

As a result of this change, broking houses have been notifying affected clients via email, app banners, and WhatsApp alerts based on the Unique Client Code (UCC) data. Almost all broking houses have been proactive in sending notifications about deadlines, risks associated with holding positions in derivatives, and options to reacquire or re-establish positions in derivatives to active derivative users. Analytics support also has lists of active users who would be impacted by these changes for targeted outreach.

Conclusion

Traders now have to adjust and resize their positions to match the new lot sizes before December 30 2025. Now the challenge for the traders is that- with contract values brought within regulatory limits and a phased transition in place.

References:

https://www.kotaksecurities.com/bulletins/lot-size-changes-in-index-derivatives-effective-december-30-2025/?utm
https://nsearchives.nseindia.com/content/circulars/FAOP70616.pdf