earlier attempts to tame the frenzy: fewer weekly contracts, higher trading costs, and higher taxes since October 2024, which Reuters notes have already pushed overall derivatives turnover to about half its June 2024 peak. But the more structural change is collateral: industry data show about 1 trillion rupees of bank guarantees were being used at fiscal year-ending March 2026, and those guarantees are typically valid for a year. As they roll off under the new regime, activity shifts from credit-backed collateral to cash-backed collateral, and that tends to reduce the number of “extra” trades that used to be economical.
Why should I care?
For markets: That 1 trillion rupees of bank guarantees is the clock for NSE liquidity.
Bank guarantees let traders post exchange-accepted collateral without parking the same amount of cash upfront, which quietly increases leverage and supports high intraday turnover. As those one-year guarantees expire, more trading has to be funded with cash or fully collateralized credit, making funding cost and available liquidity the limiting factors. In practice, that can show up first in market microstructure: thinner order books in NSE index futures and index options, wider bid-ask spreads, and higher execution costs for participants, even if headline turnover later stabilizes.