Have trading volumes dropped after STT hike on F&O? Here’s what data shows

In order to control the “highly risky F&O satta”, the government raised securities transaction taxes (STT) on derivatives trading earlier this year as it aimed to curb excessive speculation. Data, however, shows little change in volumes over the two months since the higher taxes took effect.

Ashish Nanda of Kotak Securities took to X to share data showing how volumes changed after the STT hike took effect from April 1, 2026 onwards. “March was an exceptional month, but if you compare April with any other month, volumes don’t look that bad,” he wrote.

According to the data which Nanda sourced from the stock exchanges BSE and NSE, cumulative volumes for futures and options trades stood at Rs 2.55 lakh crore in April 2026, and Rs 2.56 lakh crore in May this year. This is significantly lower than the F&O trades worth Rs 3.10 lakh crore executed in March this year, but more or less at par with the volumes seen in earlier months.

“March was an exceptional month, but if you compare April with any other month, volumes don’t look that bad,” Nanda wrote. “Some softness can be seen in index futures and stock futures though. April index futures volumes were lower than 9 out of 12 previous months. Stock futures volumes were lower than 6 of previous 12 months,” he added.

The analyst noted that options volumes, however, are not showing any sign of softness after the STT hike. “Volumes are more than 9 out of previous 12 months both for index and stock options. May is looking strong too,” he said.

After presenting the Union Budget in February this year, Union Finance Minister Nirmala Sitharaman said that the government could not remain silent as speculative ‘satta’ in derivatives inflicts heavy losses on small retail investors.Also Read | F&O satta is highly risky… how can the government stay quiet: Nirmala Sitharaman on STT hike“We are touching only the futures and options segment. No one has increased transaction costs elsewhere. Speculation, what we call ‘satta’ in Hindi, is highly risky, and many people with limited funds face heavy losses. The nominal increase in STT is aimed purely at deterring excessive speculation. We respect market activity, but the government cannot ignore the losses faced by small investors. This tax is only one element to support that policy. How the rest of the market is regulated is up to the market regulator,” Sitharaman said in a statement to the press after her Budget speech.

Announcing the changes in Parliament, the finance minister said, “I propose to raise the STT on futures to 0.05 percent from the present 0.02 percent. STT on options premium and exercise of options are both proposed to be raised to 0.15 percent from the present rate of 0.1 percent and 0.125 percent, respectively.”

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)