The Securities and Exchange Board of India issued a circular revising the order-to-trade ratio (OTR) disincentive framework that stock exchanges apply to algorithmic orders from trading members, adding a broader exemption for equity option contracts and excluding designated market maker activity from OTR calculations. The changes apply to all recognized stock exchanges except commodity derivative stock exchanges and take effect from 6 April 2026. Under the amended master circular provisions, orders placed within ±0.75% of the last traded price (LTP) remain exempt from high-OTR penalties, while equity option contract orders within ±40% of LTP (premium) or ±INR 20, whichever is higher, are now exempt. The OTR framework continues to apply to orders in the cash and derivative segments, including those under liquidity enhancement schemes, but algorithmic orders placed by Designated Market Makers for market making activity are excluded. Stock exchanges have been directed to make necessary amendments to bye-laws, rules and regulations, and to notify market participants and disseminate the circular on their websites.
Securities & Exchange Board of India 2026-02-04
Securities and Exchange Board of India revises order-to-trade ratio framework with new exemptions for equity options and designated market makers
The Securities and Exchange Board of India revised the order-to-trade ratio disincentive framework for algorithmic orders, exempting equity option contracts and excluding designated market maker activity from calculations, effective 6 April 2026. Orders within ±0.75% of the last traded price remain exempt from penalties, with specific exemptions for equity option contracts, while stock exchanges must amend regulations and inform participants.