The increase in STT on derivatives is a timely regulatory intervention. We believe the growth in F&O volumes are driven by strategies that have resulted in disproportionate volatility relative to the underlying fundamentals.

By raising transaction costs at the margin, the regulator is rightly disincentivising excessive speculative activity that adds noise rather than depth to the market.

We think this is a step towards reinforcing market discipline, strengthening price discovery, and protecting the broader ecosystem.

While there may be some near-term impact on inflows, we view that as a healthy reset. Capital that is sensitive to marginal cost changes is inherently transient; what this move does is prioritise stability and long-term capital over opportunistic flows

Naman Shah, Senior Vice President at Ohm Dovetail