SEBI relaxes OTR norms for equity options, exempts market makers' algo orders

• SEBI revises Order-to-Trade Ratio (OTR) framework, easing compliance for equity options traders.
• Algorithmic orders by designated market makers are now exempt from OTR penalties.
• Equity option orders within ±40% of LTP (premium) or ±Rs 20 are exempt from high OTR penalties.
• OTR measures orders placed relative to trades executed, with high OTR indicating excessive order placement.
• New norms, effective April 6, 2026, aim to reduce system congestion and ensure fair trading.

Key Questions Answered

How will new OTR norms impact market liquidity?

New SEBI norms for equity options, effective April 6, 2026, will exempt market makers' algorithmic orders from OTR penalties. These changes aim to curb market manipulation and reduce system congestion.

What changes for retail traders in equity options?

Retail traders in equity options face increased trading costs due to a rise in Securities Transaction Tax (STT) on premiums from 0.1% to 0.15%, effective April 1, 2026.

Will SEBI relax more trading rules soon?

SEBI is considering relaxing rules for open market share buybacks and has proposed allowing mutual fund investments via prepaid gift cards and digital wallets.