Year 2026 is going to be even more challenging for F&O (futures & Options) traders, apart from routine known risks. While presenting the Budget on February 1, Finance Minister Nirmala Sitharaman announced an increase in the securities transaction tax (STT), stating that the move would “provide a reasonable course correction” in theF&O segment while also generating additional revenue for the government.
Accordingly from April 1, 2026, the STT on sale of options has been hiked from 0.1 per cent to 0.15 per cent on premium; for exercise of options it would be 0.15 per cent (0.125 per cent) and for sale of futures 0.02 per cent to 0.05 per cent.
Currently, option trading — especially index options — dominates trading volumes, with more retail investors fancying their chances there. The percentage of individual investors making losses remained at 91 per cent in FY25, according to findings by the Securities and Exchange Board of India (SEBI).
F&O trading is a zero-sum game in which one participant’s loss is another’s gain.
A recent Reuters report said Jane Street, which is facing SEBI probe for making undue profits through ‘manipulating’ Bank options, had made net trading gains of ₹4,700 crore through its arm JSI Investment Pvt Ltd for FY25 and after-tax profit of ₹2,840 crore.
By imposing a steeper STT increase in F&O, the Finance Ministry is targeting the segment with the highest concentration of speculative retail activity. In an interview to businessline Sitharaman said: “We are not touching STT in general. We are touching only futures and options. And that is where we are getting continuously, people calling us to say people are losing money. And who are the ones losing money who normally don’t have that kind of a spare cash to speculate? So is the government supposed to sit and watch?,” she said.
SEBI initiatives
On its part, the regulator had also implemented several important measures such as limiting weekly expiries to just one index, hiking lot sizes and collecting upfront premiums from traders. SEBI also withdrew benefit of margin requirements for index derivatives on expiry days for calendar spread strategy (using two-month contracts) from last February. And, now the regulator wants to extend the same for single-stock derivatives as well, a step that could increase margin demands further to traders.
These measures have already impacted trading volume in F&O. Average daily turnover for equity options fell 24.6 per cent and 18.2 per cent (y-o-y) in December 2025 for equity options and futures respectively, according to NSE’s data.
Meanwhile, Association of NSE Members of India (ANMI) — stock brokers’ body — has approached the Finance Minister seeking a rollback and rationalisation of the recent increase in STT, raising concerns over the higher levies significantly increasing transaction costs.
Contra views
Some market experts believe that this move will not curb speculative trading activity. Zerodha founder and CEO Nithin Kamath Kamath in social media X blog post suggested that instead repeatedly raising transaction taxes, regulators should consider introducing product suitability norms to determine who is eligible to trade complex derivatives. “I know it’s an unpopular opinion, but this will remove a lot of uncertainty among brokers and traders. It’s a much better approach than death by a thousand STT hikes,” he said. He also suggested STT concession for cash segment, so that volume could shift from F&O to cash intra-day deals.
Though these suggestions sound valid and logical, one cannot brush aside the loss made by individuals. For individuals. it is more of a behavioural problem (not accepting the defeat easily) and in the process continue to lose more and more.
Rather than imposing excessive restrictions, SEBI could consider a temporary trading ban — say, for three months — if an investor incurs losses in three consecutive trades or ₹25,000 a month.
Published on February 6, 2026
