STT hike, SEBI curbs mark inflection point for broking firms, say industry experts

Diversified broking firms are better positioned to weather the impact of regulatory tightening and the proposed hike in securities transaction tax (STT) on derivatives than traditional brokers and proprietary trading firms, a recent Crisil report has noted. The findings underscore a structural shift underway in India’s broking industry as regulatory curbs reshape trading behaviour and revenue models.

An analysis of 25 broking firms across FY25 and the first half of FY26 shows that players with a higher share of non-broking income — including distribution fees, wealth management, investment banking and interest income from margin trading — have been relatively insulated from the slowdown in market activity. Firms that depend largely on transaction-linked revenues, however, have faced sharper pressure as trading volumes moderated.

Industry data reflects this shift. Average daily turnover (ADTO) across capital market segments declined nearly 25 per cent in the second half of FY25, weighed down by regulatory interventions and weaker trading sentiment. As a result, overall industry revenue fell around 6 per cent year-on-year in the first half of FY26.

For some market participants, the changes mark a decisive inflection point. Dale Vaz, co-founder and chief executive of Sahi, said the fall in volumes highlights how fundamentally the operating environment has changed. The sharp decline in ADTO, he noted, reflects the combined impact of SEBI’s recent measures in the derivatives segment and the proposed increase in STT outlined in the Union Budget 2026–27.

At the same time, Vaz argued that the evolving landscape is creating clear winners among digital-first platforms. He said Sahi’s focus on technology-led innovation and a differentiated user experience has continued to drive rapid client acquisition and double-digit month-on-month revenue growth since launch. In January 2026, the platform ranked third nationally on the NSE in net new client additions, positioning it among the fastest-growing broking platforms in the country.

Sahi is now seeking to leverage that momentum beyond options trading. Vaz said the firm sees a significant, underserved opportunity in segments such as commodities, margin trading facilities, corporate bonds, international equities and sovereign gold bonds. The aim, he added, is to make these products as intuitive and accessible for retail investors as executing a trade on the platform.

A similar evolution is visible among larger, diversified brokers. Amit Majumdar, group chief strategy officer at Angel One, said the firm’s expansion beyond equity broking has been driven less by the need to diversify revenues and more by the changing needs of digitally acquired customers. As users transition from active trading to long-term investing, he said, the demand naturally expands into wealth management, credit and other financial solutions.

This shift is increasingly reflected in revenue composition. In Q3 FY26, Angel One’s broking income accounted for about 58 per cent of revenues, down from 64.7 per cent a year earlier, while interest income rose to 33 per cent from 27.6 per cent and distribution income nearly doubled to 4.3 per cent.

Crisil said many brokers are now recalibrating business models along similar lines. However, the ability to successfully build scalable, diversified income streams will likely determine which players emerge stronger as regulatory scrutiny in the derivatives market continues to intensify.