NSE to levy 10 times higher STT on physically-settled derivatives

Since the contracts lead to actual delivery of shares, investor to be charged 0.1% STT instead of 0.01% under cash-settlement

Investors in derivatives, reeling from regulatory tightening, have received a fresh jolt.

The National Stock Exchange (NSE) has decided to levy the securities transaction tax (STT) at 0.1 per cent on derivative contracts of stocks that are physically settled. This is 10 times higher than the 0.01 per cent STT levied on stocks that are cash-settled.

To crack down on excessive speculation in the derivatives market, the Securities and Exchange Board of India (Sebi) made “physical settlement” mandatory for stocks that failed to meet certain criteria. 

In April, the NSE issued a list of 46 stocks whose derivatives contracts result in physical delivery