CIRCULAR
HO/47/11/16(2)2025-MRD-POD2/I/4113/2026 February 04, 2026
To,
All Recognized Stock Exchanges (except Commodity Derivative Stock Exchanges)
Dear Sir/ Madam,
Sub: Revision of Order-to-Trade Ratio (OTR) framework
1. Para 7.1.2.2, 7.1.2.3, 11.2.14 and 11.2.15 of Chapter 2 of the Master Circular for Stock
Exchanges and Clearing Corporations (‘Master Circular’) dated December 30, 2024,
prescribe the framework for placing effective economic disincentive by Stock
Exchanges for high order-to-trade ratio (OTR) of Algorithmic orders placed by Trading
Members (TMs).
2. Taking into account the representations received from the Stock Exchanges,
deliberations held with the various stakeholders and recommendations of the
Secondary Market Advisory Committee of SEBI, it is decided to carry out the following
modifications in the aforesaid framework:
2.1. For equity option contracts, orders within ±40% of LTP (premium) or ±INR 20,
whichever is higher, shall be exempted from the framework for imposing penalty
for high OTR.
2.2. The Algorithmic orders placed by Designated Market Makers for market making
activity shall not be considered towards computation of OTR.
3. Accordingly, para 11.2.14.1 and 11.2.14.2 of Chapter 2 of the Master Circular, are
modified as under:
“11.2.14.1. Orders placed within the range of ±0.75% of the LTP shall be exempted
from the framework for imposing penalty for high OTR. However, for equity option
contracts, orders placed within the range of ±40% of LTP (premium) or ±INR 20,
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whichever is higher, shall be exempted from the framework for imposing penalty for
high OTR.
11.2.14.2. OTR framework shall be applicable to the orders placed in the cash
segment and the derivative segment, including the orders placed under the liquidity
enhancement schemes. However, the algorithmic orders placed by Designated
Market Makers for market making activity shall be exempted from the framework for
imposing penalty for high OTR”.
4. The provisions of this circular shall come into effect from April 06, 2026.
5. The Stock Exchanges are accordingly advised to:
5.1. Make necessary amendments to the relevant bye-laws, rules and regulations for
the implementation of the above decision, as may be necessary/applicable.
5.2. Bring the provisions of this circular to the notice of the market participants
(including TMs) and to disseminate the same on their website.
6. This circular is being issued in exercise of powers conferred under Section 11 (1) of
the Securities and Exchange Board of India Act, 1992, read with Regulation 51 of the
Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)
Regulations, 2018 to protect the interests of investors in securities and to promote the
development of, and to regulate the securities market.
7. This circular is available on SEBI website at www.sebi.gov.in at “Legal → Circulars”.
Yours faithfully,
Sanjay Singh Bhati
Deputy General Manager
Market Regulation Department
Email: ssbhati@sebi.gov.in
Phone number: 022-26449222
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