New Sebi rule for stock market: Only applicable to these traders from April 6

New Sebi rule for stock market: The National Stock Exchange of India (NSE) has revised the order-to-trade ratio (OTR) framework for the equity derivatives options segment, with the changes coming into effect from April 6 (Monday), in line with Sebi guidelines issued earlier this year. The revised norms are aimed primarily at high-frequency and algorithmic traders whose order activity results in elevated OTR levels.

Under the updated rules, orders placed within a range of (+/-) 40 per cent of the last traded price (LTP) of the options premium or (+/-) Rs 20, whichever is higher, will be excluded from the OTR framework for the purpose of imposing penalties on high order-to-trade ratios. "As per aforesaid Sebi circular, the aforesaid revised OTR framework shall be released to production w.e.f April 6, 2026," the exchange stated.

This represents a significant relaxation compared to the earlier rule, where only orders within 0.75 per cent of the LTP were exempt, resulting in a relatively narrower exclusion band.

The exchange clarified that no changes have been made to the OTR framework for the equity derivatives futures segment and the cash segment. In these segments, orders entered or modified within 0.75 per cent of the LTP will continue to remain outside the OTR computation.

According to the Sebi circular issued in February, algorithmic orders placed by designated market makers for market-making activities will not be included in the OTR calculation, creating a specific exemption within the framework.

The OTR metric measures the ratio of total orders placed, including modifications and cancellations, to the number of trades executed by a trading member. The revision follows representations from stock exchanges, consultations with market participants and recommendations from Sebi's Secondary Market Advisory Committee (SMAC).

NSE also conducted a mock trading session for the revised functionality on March 14. "As per aforesaid Sebi circular, the aforesaid revised OTR framework shall be released to production w.e.f April 6, 2026," it stated.