From April 6, Indian exchanges will implement a revised Order-to-Trade Ratio (OTR) framework, bringing relief to options traders and improving overall market efficiency.
The move, backed by Securities and Exchange Board of India, aims to reduce penalties, ease compliance, and boost liquidity in derivatives trading.
OTR measures how many orders a trader places compared to how many actually get executed.
This is especially relevant in high-frequency and algorithmic trading.
Earlier, only orders within a tight 0.75% range of the last traded price were exempt from OTR penalties.
Now:
However, rules for equity futures and cash segments remain unchanged.
A major update is the exemption for algorithmic orders placed by market makers.
This is expected to improve market depth and liquidity.
The earlier OTR rules were considered restrictive, especially for:
With the new framework:
Experts believe the revised OTR rules will:
Overall, this is a positive step toward making India's derivatives market more trader-friendly and globally competitive.