Guidelines for Order-to-trade ratio (OTR) for Algorithmic Trading
Summary
SEBI has modified the existing Order-to-trade ratio (OTR) framework for algorithmic trading to introduce higher slabs and stricter penalties. Recognised stock exchanges are permitted to increase the OTR limit up to 2000 and impose deterrent incremental penalties for breaches. A cooling-off period of 15 minutes is mandated for trading members who exceed an OTR of 2000 on three occasions within a rolling 30-day period.
Text
Stock exchanges may be permitted to introduce additional slabs upto OTR of 2000 (from existing OTR of 500), and for OTR more than 2000. Such slabs can be introduced with deterrent incremental penalty, which stock exchanges may decide jointly.
On the third instance of OTR being 2000 or more, in last 30 days (rolling basis), the concerned member shall not be permitted to place any orders for the first 15 minutes on the next trading day as a cooling off action.
The recognised stock exchanges may make necessary amendment to their existing byelaws, rules and/or regulations, wherever required.
This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Guidelines for Order-to-trade ratio (OTR) for Algorithmic Trading. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.