'Kudos to FM': Shankar Sharma backs STT hike on Futures & Options

Market veteran Shankar Sharma has welcomed the government's decision to raise the Securities Transaction Tax (STT) on derivatives, calling it a key positive of the Union Budget 2026-27. Reacting to the Budget announcement, the Founder of GQuant Investech praised Finance Minister Nirmala Sitharaman for the move.

"I love this Budget for ONE major reason: hiking of STT on derivatives. Derivatives are a poison x cocaine, eating away at the roots of our youth. Its destructive effect will be felt by generations. It's a pure wealth transfer from the traders to F& O specialist brokers, who have been massive winners of this drug + gun trade. ( Not their fault). F&O adds zero value to India. It deducts inestimable value. It can't be stopped but it can be taxed the hell out of. Kudos to the Finance Minister," Sharma wrote in a post on X (formerly Twitter).

The Centre has stressed that the STT hike is limited strictly to futures and options (F&O) trading. Revenue Secretary Arvind Shrivastava underlined that STT rates in all other market segments remain unchanged.

Addressing the media in a post-Budget briefing on Sunday, Shrivastava said the measure is intended to curb excessive speculation in the derivatives market. "When you look at the volume of transactions in futures and options -- whether relative to GDP or to the size of the underlying securities market -- it is largely in the realm of heavy speculation, which often results in losses for small retail investors," he said.

He added that the objective is to discourage speculative behaviour and mitigate systemic risks arising from the rapid growth of derivatives trading. "The increase in the rate is essentially in that direction. Even after the hike, STT rates will remain modest when compared with the sheer volume of transactions taking place," Shrivastava noted.

A study by capital markets regulator Sebi has shown that nine out of 10 individual traders in the equity F&O segment continue to incur losses.