Derivatives trading faced fresh pressure after the Union Budget 2026 confirmed a sharp increase in Securities Transaction Tax on futures, raising transaction costs across the futures and options segment. The STT on futures has been increased from 0.02% to 0.05%, a move that effectively more than doubles the tax burden on leveraged trades.
The higher levy is expected to weigh on broking margins and dampen activity in the F&O segment, particularly among retail participants who are sensitive to incremental costs. Market participants flagged that the immediate impact could be visible in trading volumes as higher friction discourages frequent and short-term derivatives positions.
Broking stocks and market infrastructure plays, including BSE, were seen facing near-term headwinds as investors assessed the implications of reduced derivatives churn and pressure on transaction-linked revenues. The rise in STT is also likely to affect algorithmic and high-frequency trading strategies that rely on tight cost structures and high turnover.
Overall, the key takeaway from the budget announcement is that the effective tripling of STT on futures compresses leveraged trade economics in the near term, putting brokers and active derivatives traders under margin pressure while potentially curbing speculative activity in the F&O market.
Disclaimer: This article is for informational purposes only and is based solely on the inputs provided. It does not constitute investment advice or a recommendation.
