Shankar Sharma hails Budget’s STT hike on derivatives, calls F&O ‘destructive for youth’

Shankar Sharma hails Budget’s STT hike on derivatives, calls F&O ‘destructive for youth’

Market veteran Shankar Sharma has applauded the Government decision to raise Securities Transaction Tax (STT) on derivatives, calling it the most significant proposal of the Budget.

In a post on social media platform X, Sharma said excessive participation in derivatives trading has had a corrosive impact on India’s youth and long-term wealth creation. “Derivatives are a poison x cocaine, eating away at the roots of our youth. Its destructive effect will be felt by generations” he wrote.

Sharma described the futures and options (F&O) market as a “pure wealth transfer” from retail traders to specialised derivatives brokers, who, he noted, have emerged as major beneficiaries of the boom in trading volumes. He clarified that the gains accrued to brokers were “not their fault,” but a consequence of the market structure.

“F&O adds zero value to India. It deducts inestimable value,” Sharma said, arguing that while derivatives trading cannot realistically be eliminated, it should be discouraged through higher taxation. “It can’t be stopped, but it can be taxed the hell out of,” he added, applauding the Finance Minister for the move.

There were concerns due to rising volumes of F&O trading in the past and regulator SEBI has taken various measures to curb it in the last 2-3 years. Including curbing on weekly expiry, uofront collection of margin, hike in margin on expiry days, increased lot sizes,  monitoring of intraday position etc.