The Securities and Exchange Board of India (SEBI) on February 04, 2026, notified regarding the Revision of the Order-to-Trade Ratio (OTR) framework.
The following has been stated:
• SEBI has modified the framework for imposing economic disincentives for high Order-to-Trade Ratio (OTR) arising from algorithmic trading by Trading Members, as prescribed under the Master Circular dated December 30, 2024. Based on stakeholder representations and recommendations of the Secondary Market Advisory Committee, SEBI has decided that for equity option contracts, algorithmic orders placed within ±40% of the Last Traded Price (premium) or ±₹20 (whichever is higher) shall be exempt from OTR penalty computation, replacing the earlier, narrower LTP-based exemption. Further, algorithmic orders placed by Designated Market Makers (DMMs) in the course of market-making activities shall not be considered for OTR computation at all.
• Accordingly, paragraphs 11.2.14.1 and 11.2.14.2 of the Master Circular have been amended to reflect these exemptions, while the OTR framework continues to apply to cash and derivative segments, including orders under liquidity enhancement schemes.
• The revised provisions will come into force from April 6, 2026.
[Notification no. - HO/47/11/16(2)2025-MRD-POD2/I/4113/2026]
