STT Hike on Derivatives: Impact on Trading Volumes, Brokers, and Exchanges Expected

• The Budget proposes a significant increase in Securities Transaction Tax (STT) on equity Futures & Options (F&O) segment.
• STT on futures rises from 0.02% to 0.05%, and on options premium/exercise to 0.15% (from 0.10%/0.125%).
• Industry experts like Shripal Shah (Kotak Securities) and Vishad Turakhia (Equirus Securities) anticipate a cooling effect on derivative volumes and negative impact on broker/exchange revenues.
• BSE's MD & CEO, Sundararaman Ramamurthy, views the recalibration as encouraging long-term equity participation, while Shankar Sharma calls it a crucial step against 'poisonous' derivatives.
• SEBI has previously taken steps to curb F&O activity, with studies showing 9 out of 10 individual traders losing money in F&O.

Why It Matters: Increased STT on equity derivatives is set to reduce trading volumes and impact financial market participants.