The National Stock Exchange (NSE) had announced on March 31 about the revision of market lot of derivative contracts. The revision will be applicable from the July contracts – both futures and options.

Notably, the lot size of Nifty Bank is reduced from 25 to 15 from July contracts. But the market lot of other indices has not changed. So, Nifty 50, Nifty Financial Services and Nifty Midcap select will continue to have their market lot of 50, 40 and 75 respectively.

This is a periodic revision that NSE makes in line with the guidelines, which say that the contract value, at the time of revision, should be between ₹5 and ₹10 lakh.

For example, considering Nifty Bank’s (43,623) current lot size of 25, the contract value now comes to nearly ₹11 lakh. But after the revision to 15, it will come down to around ₹6.5 lakh, thus remaining under ₹10 lakh. This has been applied to all stocks that are listed in the futures and options (F&O) space.

Like Nifty Bank, there are some stocks whose market lot will also be revised. According to NSE’s circular, 33 stocks will undergo a change. Among them, the lot size of 30 stocks will be revised upwards. For the other three stocks, the lot size will be revised downward but the multiple will not be of the old lot size.

From traders’ perspective, this is good news as a reduction in contract value means lesser margin obligations. Lower contract value also means lower cost of hedging and it can also improve the liquidity.

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