NSE txn fees cut is balm for STT hike

The amendments to the bill raised the STT on sale of futures contracts by 25% and on sale of options by 24%, effective 1 April, which will impact high-frequency or algo traders the most and retail investors who moved to the F&O segment in a big way since the pandemic began in March 2020.

The effective hike is 0.0125% per ₹1 crore on futures from 0.01% and on options to 0.062% from 0.05%. That effectively raises the transaction fee to ₹1,250 on a futures lot from ₹1,000 earlier, and on the options to ₹6,200 from ₹5,000 earlier.

However, NSE said after its board meeting on Thursday that the effective cut in transaction charges on cash market and equities derivatives segment would be 4% overall and effective 1 April.

“There will be some impact of the hike in STT on derivatives,” said Rajesh Baheti, MD, Crosseas Capital, one of the country’s top proprietary brokers.

“The partial offset would be due to NSE reducing effective STT on cash and derivatives segments by around 4%.”

NSE said in a circular that it would roll back the increase of 6% in transaction charges imposed since 1 January 2021 to augment the NSE Investor Protection Fund Trust (IPFT).

The rollback would be effected on April 1. However, the bourse said it was augmenting the corpus of IPFT by recalibrating the contribution to ₹10 per crore from 1 paise in cash equities and equity futures segments and to ₹50 per crore in equity options from 1 paise per crore earlier.

The above reduction in transaction charges partially offset by the recalibration of IPFT contribution will lead to “effective reduction impact on overall transaction charges by around 4%,” the bourse said in a circular.

“The STT hike could lead to F&O volumes being hit as it will result in maximum impact on automated traders who enter and exit trades rapidly to make a quick buck,” said Rajesh Palviya, VP head derivatives and technical), Axis Securities.

The overall volumes in the equity derivatives segment spurted to a daily average of ₹152 trn in FY23 from ₹68.3 trn in the previous fiscal year.