New SEBI Norms for Stock Market Effective April 6; Impact on Select Traders

Starting April 6, the National Stock Exchange (NSE) has implemented revised guidelines for the order-to-trade ratio (OTR) in the equity derivatives options segment, following earlier directions issued by SEBI. These changes are largely targeted at high-frequency and algorithmic traders who typically generate a high volume of orders compared to executed trades.

As per the updated framework, certain orders will now be kept outside the OTR calculation for penalty purposes. Specifically, orders placed within a range of ±40% of the last traded price (LTP) of the options premium or ±₹20 (whichever is higher) will be excluded. This marks a considerable relaxation from the previous rule, where only orders within 0.75% of the LTP were exempted, offering a much narrower margin.

Importantly, the revised norms apply only to the options segment. There are no changes in the OTR calculation for the equity derivatives futures segment or the cash market, where the earlier threshold of 0.75% of LTP for exclusion continues to remain in place.

Additionally, SEBI has provided a specific exemption for algorithmic orders placed by recognized market makers as part of their market-making activities. These orders will not be counted in the OTR computation.

The OTR is a key metric used to assess trading behavior, calculated as the ratio of total orders placed (including modifications and cancellations) to the number of trades executed. The revision follows industry feedback, discussions with stakeholders, and recommendations from SEBI’s Secondary Market Advisory Committee (SMAC).

To ensure smooth implementation, NSE had already conducted a mock trading session on March 14 before rolling out the updated system in the live market from April 6, 2026.