I read in moneycontrol.com that SEBI is mulling to increase STT for derivatives in order to curb excessive volumes in derivatives segment compared to cash segment(15:1).
How much will be the increase in STT?
What will be the impact on retail traders and discount brokers like Zerodha?
Wont such a measure drive away retail traders with small capital from FnO market?
@Nithin please share your thoughts on this…
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they haven’t made any announcements.
Ignore this for now.
SEBI is calculating notional turnover on futures. but actual amount used is only 15-20% of that. in that case traders will switch over to ITM options instead of futures.
Someone like Nithin (who is influential) should represent the case to SEBI on our behalf. Otherwise we retail traders might take a beating.
I feel SEBI is more interested in helping BIG players (FIIs, HNIs, etc) at the cost of retail traders. I hope I am wrong on this point !
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SEBI is also considering a revision of STT for options. So even option traders might get affected.
Even if STT is same as futures, options would be better since STT is levied on premium instead of Notional value. Notional value of Maruti Futures is 11 lakhs. Options premium is not even 5% of this.
So we will pay about 80% less STT on options premium compared to Futures.
If you see number of Future contracts held by FII it is less than 50% of Options Contracts.
Unfortunately SEBI is favoring FII.
As per the discussion paper on SEBI site. FII are not very active in derivatives segment and mostly hedge(not speculate). It seems brokers are very active in writing options and mostly bought by retail investors. So I presume the direction of SEBI is
- Increase lot size of Futures & Increase margin to restrict number of retail investors
- Levy STT and presumably stamp duty on notional value for Options.