Impact of Increased STT on Futures and Options Trading Volumes
Have trading volumes dropped after STT hike on F&O? Here's what data shows
Image: The Economic Times
Following the government's hike in securities transaction tax (STT) on derivatives trading from April 1, 2026, trading volumes have shown little change. Data indicates cumulative volumes for futures and options trades were Rs 2.55 lakh crore in April and Rs 2.56 lakh crore in May, comparable to earlier months despite a drop from March's Rs 3.10 lakh crore.
- 01Cumulative trading volumes for futures and options were Rs 2.55 lakh crore in April and Rs 2.56 lakh crore in May 2026.
- 02March 2026 recorded an exceptional trading volume of Rs 3.10 lakh crore, significantly higher than the following months.
- 03Index futures volumes in April were lower than 9 out of the previous 12 months, while stock futures were lower than 6 out of 12 months.
- 04Options trading volumes remained robust, exceeding levels from 9 out of the last 12 months for both index and stock options.
- 05Finance Minister Nirmala Sitharaman stated that the STT hike aims to deter excessive speculation, which often leads to significant losses for small investors.
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In an effort to mitigate excessive speculation in derivatives trading, the Indian government raised the securities transaction tax (STT) on futures and options effective April 1, 2026. Despite concerns about potential declines in trading volumes, data from Kotak Securities indicates that cumulative volumes for futures and options trades were Rs 2.55 lakh crore in April and Rs 2.56 lakh crore in May. Although these figures are lower than the exceptional Rs 3.10 lakh crore recorded in March, they align closely with volumes from earlier months. Analyst Ashish Nanda noted a decline in index and stock futures, with April volumes falling below those of 9 and 6 of the previous 12 months, respectively. Conversely, options trading has remained strong, showing higher volumes than 9 out of the last 12 months. Finance Minister Nirmala Sitharaman emphasized that the STT increase is intended to protect small retail investors from the risks associated with speculative trading.
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The increase in STT aims to reduce speculative trading, potentially impacting small retail investors who may face losses.
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