Budget 2024: Centre Hikes STT On F&O; Regulator, Exchanges To Take Steps To Deal With Volume, Says NSE

In response to the recent increase in the securities transaction tax on futures and options in the Union budget, NSE CEO Ashishkumar Chauhan said that it is now the responsibility of regulators and exchanges to advance this initiative. Chauhan mentioned that consultations on this matter are ongoing.

In the Union budget presented on Tuesday, Finance Minister Nirmala Sitharaman announced that the STT on futures has been increased from 0.01% to 0.02%, and the STT on options has been raised from 0.062% to 0.1%.

Chauhan said during the post-budget briefing that this adjustment addresses the ongoing criticism regarding the excessive volume of derivatives trading.

Recently, SEBI Chairperson Madhabi Puri Buch expressed concerns over the rapid growth in derivatives trading, highlighting potential broader economic implications. The 2023–24 Economic Survey underscored this issue, revealing that derivatives, originally intended for hedging, are predominantly used for speculation globally, with India likely being no exception. The survey emphasised that derivatives trading can lead to significant gains, appealing to speculative instincts.

Further, RBI Governor Shaktikanta Das, in a recent address in Mumbai, highlighted the increasing gap between credit and deposit growth. He warned that this disparity could expose the financial system to liquidity challenges as household savings shift from traditional bank deposits to capital markets.