Comment on STT Trap - Options Expiry - NSE BSE MCX-SX
commented on
21 Feb 2017, 03:51 PM
STT, it appears is being charged due to a mistaken definition of Settlement Price.
From NSE Website
1. STT Levy
https://www.nseindia.com/products/content/derivatives/equities/sec_tranc_tax.htm
In case of final exercise of an option contract STT is levied on settlement price on the day of exercise if the option contract is in the money.
2. Settlement Price of options on exercise
https://www.nseindia.com/products/content/derivatives/equities/settlement_price.htm
Options Contracts on Index and Individual Securities
Final Exercise Settlement
Closing price of such underlying security (or index) on the last trading day of the options contract.
It is clear that the settlement price of options contracts is incorrect as above. As per the above definition the holders of ITM options contracts on expiry should be exercise settled with the closing price of the underlying (index or stock)!
May I suggest that this is taken up with NSE.