Nithin Kamath Proposes Suitability Criteria Over STT Hikes to Curb Speculation

• Zerodha CEO Nithin Kamath questioned the government's reasoning for increasing Securities Transaction Tax (STT) on derivatives in Budget 2026, arguing it's a blunt instrument.
• Kamath stated that the STT hike, particularly impacting futures, might push more traders towards riskier options, where 95% of trading already occurs.
• He suggested that establishing product suitability or eligibility criteria for derivatives trading would be a more effective way to reduce speculation than repeated tax increases.
• The finance ministry defended the STT hike, citing systemic risk due to F&O trades being 500 times India’s GDP, aiming to curb speculative activity and protect small investors.
• Market participants largely agreed with Kamath, expressing concerns that higher STT could hurt liquidity, increase transaction costs, and potentially drive traders offshore.

Why It Matters: Nithin Kamath advocates for product suitability criteria instead of STT hikes to effectively curb market speculation.