Need for F&O to go up as geopolitical risks rise, says NSE CEO Ashish Chauhan

Ashish Chauhan, Managing Director and CEO of the National Stock Exchange (NSE), said there is a need for the futures and options (F&O) segment to grow as geopolitical risks rise. He noted that further degrowth in F&O volumes could be seen after the tax hike comes into effect in April, adding that measures and rules to curb excessive speculation will continue.

Following the announcement by FM Sitharaman share market witnessed a massive crash, with benchmark indices falling nearly 2 per cent. Sensex fall 2,370.36 points to 79,899.42 during the trade; while Nifty tumbled 748.9 points to 24,571.75.

The announcement is a negative for capital market companies like Angel One, Groww (both broking firms), NSDL, CDSL, (both depositories and BSE Ltd.)

Securities Transaction Tax (STT) is a direct tax levied on transactions involving securities -- such as stocks, mutual funds, and derivatives -- executed on recognised stock exchanges in India. Being imposed directly on the transaction value, STT increases the cost of buying and selling these securities.

The Securities Transaction Tax Act outlines the taxable transactions, which include equities, derivatives, and units of equity-oriented mutual funds. STT also applies to unlisted shares sold to the public under an offer for sale before listing on stock exchanges.

The government periodically sets and revises STT rates, and depending on the type of transaction, either the buyer or the seller is responsible for paying the applicable tax.

STT is levied on buying and selling stocks and other securities on Indian stock exchanges. For delivery trades, since STT is levied on both buying and selling, the average price of the transaction is calculated using the following formula:

Average Price = (Buy Quantity × Buy Price) + (Sell Quantity × Sell Price) ÷ (Buy Quantity + Sell Quantity)

In other words, it equals the total cost of buying shares plus the total proceeds from selling shares divided by the total number of shares traded.

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)