NSE To Discontinue ‘Do Not Exercise’ Facility from 29 March

The National Stock Exchange (NSE) has decided to discontinue the 'Do Not Exercise' (DNE) facility for Future & Option (F&O) traders from 29 March, 2023. This facility will continue for the Index Options traders.  

This was stated by NSE through a circular issued on Monday. The circular stated that the 'Do Not Exercise' (DNE) available for stock options will be discontinued on 30 March, 2023. As stock markets will be closed on 30 March on the occasion of Ram Navami, 29 March will be the last official date for the DNE facility. 

After the option is discontinued, the brokers won’t be able to exercise options contracts on behalf of clients. The 'Do Not Exercise' (DNE) facility acts as a fail-safe for options traders at the time of cash settlement of the options contracts. It allows a trader to instruct the broker if he or she does not wish to exercise the right to give or receive deliveries. 

The facility has a history of being introduced and then discontinued regularly. It was introduced in 2019, discontinued in 2021, and again reintroduced in April 2022. In 2022, SEBI’s Risk Management and Review Committee had said that DNE will safeguard the interests of the options traders.  

The facility also prevented the risks around the physical settlement and allowed brokers to stop exercising Close To Money (CTM) option strikes on behalf of clients. 

Market experts and analysts opine that the discontinuation of this facility would have a negative impact on options trade volume as traders won't have an auto square off facility after the end of monthly options in stock options trade. They added that this will discourage high-risk options trade and push cash trade, which is good for a low risk trader and investor.