Hiking STT on derivatives and cutting STT on cash trades

There is a growing demand and talk on hiking STT for F&O to curb excess participation in those segments.

At the same time, for cash trading, The recommendation is to cut the STT to encourage more traders to participate in it.

@nithin your thoughts on this?

I think this was in the context of commodity trading.

But even in equities, one section of the community believes that all trading volumes moving to options isn’t necessarily optimal and that this shift is happening because STT when trading options is much lesser than futures or cash trading.

While I think lower STT is helping, that is not the only reason for options becoming more popular. I think options are more attractive due to higher potential payoffs, especially with restrictions on intraday leverages on futures and cash trading. Also, the introduction of weekly options means that comparing options to futures or cash in terms of turnover is misleading.

My gut says STT will probably go up for options trading in one of these budgets. I hope it doesn’t, but I think it will. :slight_smile: A small bump in STT on options trading won’t make any difference to the trading volumes, though, since options will continue to attract more volumes for the reasons mentioned above. Anything larger than a small bump could hurt the overall trading activity on the exchanges.