Singapore's Securities and Futures Act Amendments: Derivatives Traders Face New Regulatory Landscape

New Tax Structure Hits Indian Derivatives Traders

April 1, 2026, marked a significant shift in the cost structure for derivatives traders in India. The Securities Transaction Tax (STT) on futures increased from 0.02% to 0.05%, while options moved from 0.1% to 0.15%. These seemingly small numbers have a profound impact on trading, as they compound rapidly and consistently against traders.

The STT is a tax on trading activity, levied on every transaction, regardless of profit or loss. This means that every trade, win or lose, incurs a tax on turnover. In markets with high retail participation, such as those around expiry days, this adjustment is not minor.

The Impact of STT on Trading

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The new STT rates have a significant effect on a trader's breakeven point. Without adapting to this change, traders risk being drained of their account balance through the sheer cost of trading. To avoid this, traders must reassess their behavior and trading strategies.

Reducing Trading Costs

To mitigate the impact of STT, traders should adopt a more selective approach to trading. This includes reducing the number of trades and focusing on high-probability setups. Traders should also consider moving from intraday trading to short-term positional trading, which can help reduce the burden of STT.

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A key benefit of positional trading is that it exposes traders to fewer whipsaws, or false moves, which can shake them out of a trade before the real trend begins. By holding positions for 2 to 5 days, traders can give their setups time to work and achieve more consistent results.

Options as a Viable Alternative

The new STT rates have created a significant advantage for options trading. While options costs have risen, they have done so far less steeply than futures. Moreover, options offer traders flexibility, allowing them to structure trades around volatility, price levels, and days to expiry.

When buying options, traders should focus on high-probability setups and avoid chasing small premiums. It is essential to calculate the full breakeven, including STT and brokerage, before entering any trade. If the math does not work, the trade does not work.

Ultimately, the traders who adapt to the new STT structure will find an edge, while those who continue to trade the old way will struggle to make a profit. The market does not care about intentions; it responds to cost structure. By getting the cost structure right, traders can give themselves a real chance of success.