NSE Adjusts OTR Regulations for Equity Options Starting April 6
Synopsis
The National Stock Exchange is set to implement revised order-to-trade ratio regulations for equity derivatives options, effective April 6. This change, in accordance with SEBI guidelines, significantly expands the exemption range, allowing for more flexibility in trading operations.
Key Takeaways
NSE revises OTR framework for equity options.
New rules effective from April 6 .
Exemptions expanded to orders within (+/-) 40% of LTP.
No changes for equity futures and cash segments.
Algorithmic orders by market makers exempt from OTR.
Mumbai, April 4 (NationPress) The National Stock Exchange (NSE) has updated the order-to-trade ratio (OTR) policy for the equity derivatives options segment, with changes taking effect from April 6, following SEBI guidelines released earlier this year.
Under the new guidelines, orders placed within a range of (+/-) 40 percent of the last traded price (LTP) of the options premium or (+/-) Rs 20, whichever is greater, will be exempt from penalties related to high OTR.
This represents a substantial easing from the previous rule, which allowed exemptions only for orders within 0.75 percent of the LTP, leading to a much tighter exemption band.
The exchange has also emphasized that the OTR framework for the equity derivatives futures segment and the cash segment remains unchanged. In these areas, orders modified or entered within 0.75 percent of the LTP will still be exempt from OTR calculations.
According to the SEBI circular released in February, algorithmic orders made by designated market makers for market-making purposes will not be included in the OTR calculation, offering a specific exception within the framework.
The OTR metric evaluates the ratio of total orders placed, including modifications and cancellations, to the number of trades executed by a trading member.
This metric is utilized by exchanges to oversee excessive order placements and maintain orderly market conditions.
The adjustments come after feedback from stock exchanges, discussions with market stakeholders, and recommendations from SEBI’s Secondary Market Advisory Committee (SMAC).
A mock trading session to test the revised functionality was held on March 14.
The NSE confirmed that all existing penalties, actions, and other processes under the OTR framework, as outlined in previous circulars, will remain unchanged.
Point of View
The recent adjustments to the OTR framework by the NSE reflect a strategic shift towards facilitating greater trading activity while maintaining market integrity. This change aims to strike a balance between regulation and flexibility, benefiting both traders and the broader financial ecosystem.
NationPress
12 Jul 2026
Frequently Asked Questions
What is the order-to-trade ratio (OTR)?
The order-to-trade ratio (OTR) measures the total number of orders placed, including modifications and cancellations, against the number of trades executed by a trading member.
When do the new OTR regulations take effect?
The revised OTR regulations will come into effect on April 6.
What are the new exemption criteria for orders?
Orders placed within a range of (+/-) 40 percent of the last traded price or (+/-) Rs 20, whichever is higher, will be exempt from penalties under the OTR framework.
Will the changes affect the equity derivatives futures segment?
No, the OTR framework for the equity derivatives futures segment and the cash segment remains unchanged.
What is the purpose of the OTR metric?
The OTR metric is used by exchanges to monitor excessive order placements and ensure orderly market functioning.
