The Securities and Exchange Board of India (SEBI) is actively deliberating ways to further improve volume in cash segment. The idea is to expand and deepen the cash segment compared to the derivatives segment. As per one source, aware of the development, “Regulator had sought suggestions on the proposal to deepen the cash market and inputs have been collected from key stakeholders like exchanges, clearing corporation, brokers and others”.
The person cited above said, “Inputs collected are being analysed by SEBI internally and then it’s likely that the inputs collected will be presented before a sub-group or the SEBI advisory committee”. After receiving the inputs SEBI may come up with public consultation paper for the same.
SEBI Chairman, Tuhin Kanta Pandey had mentioned earlier that cash segment volume should increase further. On August 21 at FICCI Capital Market Summit, Pandey said, “We are looking to deepen the cash equities market, which is the true foundation of capital formation”. Pandey further added, “Volumes in cash market have grown rapidly doubling in terms of daily traded volumes over a period of just three years. However much more needs to be done”.
SEBI has received wide range of suggestions on the proposal to further deepen the cash market volume in equity segment. As per sources, the suggestions received include reducing margin on cash segment trades, promoting stock lending and borrowing mechanism, promoting Exchange Traded Funds (ETFs), reduction or removal of Securities Transaction Tax (STT) on cash market intra-day trades etc.
Another source aware of the matter said, “Every suggestion is being examined holistically and then proposal will be forwarded for further deliberation”. As each suggestion may have some positive and negative consequences. Like, reduction of margin may be good but it may not be prudent from risk management perspective. Similarly, SLBM can also be an option for increasing the cash volume but will require push to make it popular in traders.
Mrugank Paranjpe, Chairperson, IMC Task Force on Capital Market and formed MD&CEO, MCX says, “Information asymmetry is the slowest killer of cash volumes, democratizing analyst consensus, ESG flags, and promoter actions through open APIs can level the playing field". He also advocates, incentivsing investors, Paranjpe adds, “Sustainable volume growth needs patient capital , rewarding 3–5-year holdings with exit-load rebates or lower STT would shift behaviour from momentum to conviction."
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The volume in cash market has gone up in recent years but compared to derivative its still less. So, regulator wants a proper balance for the same. As per SEBI data the average daily turnover in cash market was Rs 39,148 crore in FY20 and increased to Rs 66,007 Crore in FY21, in FY22 the numbers further increased to Rs 72,368 crore, FY23 saw a small dip and number was Rs 57,666 crore, in FY 24 the number jumped to Rs 87,978 crore and by FY25 the number further jumped to Rs 1,20,782 crore. As on September 30, 2025 the average daily turnover of NSE and BSE in cash segment is around Rs 1.06 lakh crore.
Arun Kejriwal, Director, Kejriwal Research and Investment Services (KRIS) said the simplest high-impact lever remains STT rationalisation. “Government and SEBI put together need to incentivise the delivery trade, which actually goes for capital formation. Best way is SEBI should request Finance Ministry to bring down STT on cash segment delivery trades. Taking delivery is like punishment for investors,” Kejriwal said.
Currently, Rs 25 is charged as STT on per lakh value of trade on cash segment intraday sell side trades and Rs 100 on per lakh value of buy and sell both sides on delivery trades. An email seeking comments from SEBI did not elicit any response.
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