IRCTC to Exit F&O Segment from Feb 25 2026

IRCTC to Exit F&O Segment from Feb 25 2026

Why in News? 

The National Stock Exchange (NSE) will remove IRCTC from the Futures and Options (F&O) segment starting from February 25, 2026, due to the company not meeting the Securities and Exchange Board of India’s (SEBI) revised, tighter eligibility norms.

SEBI’s Revised Eligibility Norms for F&O Trading

• On August 30, 2024, the Securities and Exchange Board of India (SEBI) introduced a transformative update to the eligibility criteria for stocks entering and exiting the Futures and Options (F&O) segment. 
• This overhaul, replacing the long-standing 2018 framework, was designed to bolster market quality by ensuring that only securities with high liquidity and depth are traded in the derivatives space. 
• The new eligibility landscape focuses heavily on the cash market performance of a stock over a continuous six-month rolling period. One of the primary indicators of a stock’s readiness is the Median Quarter Sigma Order Size (MQSOS), which must now reach at least ₹75 lakh. This specific measurement serves as a benchmark for trade size, ensuring that the stock possesses the necessary liquidity.
• In a significant shift from previous regulations, SEBI tripled the requirement for the Market Wide Position Limit (MWPL), raising the bar from ₹500 crore to ₹1,500 crore. This substantial increase ensures that a stock has a large enough float and institutional interest to support a robust derivatives market.
• Furthermore, the stock must maintain an Average Daily Delivery Value (ADDV) of no less than ₹35 crore over the same six-month window, a rule intended to verify consistent trading volume rather than temporary or speculative spikes in activity.
• Beyond individual stock metrics, SEBI integrated a Product Success Framework (PSF) to evaluate a stock’s actual engagement within the derivatives ecosystem. For a stock to remain eligible, it must see active participation from at least 15% of trading members in the equity derivatives segment, or 200 members, whichever is lower, on a monthly average. L
• This institutional engagement is paired with strict trading day requirements, necessitating activity on at least 75% of available sessions during the review period to demonstrate sustained market interest.
• The regulatory body has also established a rigorous exit mechanism to maintain the integrity of the F&O list. Should a security fail to satisfy any of the mandatory conditions—specifically the MQSOS, MWPL, or ADDV thresholds—for a period of three consecutive months, it is subject to mandatory removal from the F&O segment.

Why Is IRCTC Being Removed from the F&O Segment?

• IRCTC is being removed from the Futures and Options (F&O) segment by the National Stock Exchange (NSE) with effect from 25 February 2026 because the stock no longer satisfies important market measures required by the regulatory framework. 
• One of the primary practical reasons for IRCTC’s removal from F&O is the relative decline in derivatives activity associated with the stock over recent periods compared with other stocks in the F&O list. IRCTC’s contracts in the F&O segment have seen lower turnover and comparatively thin open interest levels when measured against high-activity F&O stocks. 
• In 2025, IRCTC’s equity experienced a volatile trajectory, oscillating between a 52-week peak of ₹831.75 and a floor of ₹656.00. This price action reflects a broader trend of sectoral correction and investor caution, as the stock navigated shifting market sentiments and regulatory updates throughout the fiscal year.
• ​The transition toward cash market exposure indicates a strategic pivot by market participants away from leveraged derivatives. As traders move toward the delivery segment, exchanges and market makers interpret this as a search for long-term stability, particularly as the stock prepares for its scheduled F&O exit in early 2026.

Implications of IRCTC’s Exit from the F&O Segment

• Impact on Retail Investors: Individual traders will lose access to leveraged instruments, effectively ending high-risk intraday speculation and option selling in IRCTC. While this limits short-term flexibility, it protects smaller participants from sudden capital erosion. The transition to a cash-only market fosters a more conservative trading environment, potentially stabilizing the stock by reducing panic-driven selling during broader market corrections.
• Institutional Strategy Shifts: Mutual funds and FPIs will no longer be able to execute stock-specific hedging for their IRCTC holdings. Instead, they must pivot to portfolio-level strategies to manage risk. Although this slightly diminishes tactical flexibility, the stock’s underlying value remains attractive. Consequently, institutional interest is expected to remain firm, prioritizing long-term strategic investment over short-term derivative maneuvers.
• Dynamics of Market Liquidity: The absence of arbitrageurs and high-frequency derivative traders after February 2026 will likely lead to a moderate dip in daily turnover. However, IRCTC’s strong brand recall and sovereign backing ensure a steady stream of retail participation. While the traded value may contract marginally, the stock’s popularity suggests that liquidity will remain sufficient for most investors.
• Core Fundamentals and Stability: Crucially, the exit from the F&O segment has zero impact on IRCTC’s business model. The company retains its monopoly in railway ticketing and catering, supported by a debt-free balance sheet. As a robust PSU, its financial profile remains stable, ensuring that its intrinsic value continues to be driven by operational success rather than derivative activity.

Role of NSE in Implementing Derivative Market Reforms

• The National Stock Exchange of India (NSE) plays a central role in implementing reforms in the derivative market under the regulatory framework laid down by SEBI.
• Since its establishment in 1992, NSE has focused on transparency, technology driven trading, and risk control. 
• In the derivatives segment, NSE acts as the primary execution and monitoring authority. It ensures that policy changes issued by the regulator translate into operational rules that shape daily market behavior.
• NSE conducts periodic evaluations based on prescribed data metrics. These reviews rely on rolling cash market and derivatives data. The exchange applies the framework uniformly across all listed companies.
• NSE also manages the contract lifecycle in the F&O segment. This includes introduction of new contracts, continuation of existing series, and orderly discontinuation when required. When a stock is identified for exit, NSE allows all live contracts to expire naturally.
• NSE also contributes to reforms through product rationalisation. The exchange evaluates whether certain derivative products add economic value or only fuel speculation. Based on regulatory direction, NSE has reduced contract clutter by removing low participation instruments.