SEBI 2026 proposals: price bands, OTR, options

A wider push to standardise exchange practices

The Securities and Exchange Board of India (SEBI) has put several market-structure proposals in the public domain that point to a common theme: standardisation across exchanges and simpler compliance. Across equities and derivatives, the regulator is targeting rule duplication, inconsistent exchange practices, and operational friction for intermediaries. Some proposals focus on price discovery in thinly traded securities, while others deal with how derivatives contracts are designed and monitored. SEBI has also proposed updates that affect disclosures, surveillance, and how exchanges share data with each other. Alongside these, the government has tabled a draft Securities Markets Code Bill, 2025, which could consolidate legacy laws into a single code. Together, these developments matter for brokers, exchanges, market makers, and investors because they reshape day-to-day trading rules and risk controls.

Harmonised base price and daily price bands for multi-listed stocks

SEBI has proposed a harmonised framework for determining base prices and daily price bands for stocks listed on multiple exchanges, with the stated aim of reducing price divergence in thinly traded securities. Under the proposal, if a stock trades on only one exchange on a particular day, all other exchanges would use that exchange’s closing price to set the next day’s price band and the pre-open call auction base price. If the stock trades on more than one, but not all, exchanges, then exchanges where no trades occur would adopt the closing price of the exchange that recorded the highest trading volume. Where trading takes place on all exchanges, each exchange would continue to use its own closing price. The same “own closing price” approach would apply if there is no trading on any exchange. To make this work operationally, SEBI indicated that exchanges may be required to enter into arrangements for sharing closing-price data.

Options strike prices: SEBI’s May 25 consultation paper

On 25 May 2026, SEBI released a consultation paper titled Ease of Doing Business Framework for Strike Prices of Options Contracts. The paper is described as the third part in a series on Exchange Traded Derivatives. It proposes changes to how strike prices in options contracts are introduced and managed across Indian exchanges. A central proposal is to replace the existing patchwork of exchange-specific strike price rules with a single uniform national framework applicable to all recognised stock exchanges and commodity derivatives exchanges. SEBI also proposed allowing exchanges to introduce new strike prices during live trading hours, which would be a shift from more rigid introduction schedules. Another proposed change is removal of the CTM mechanism for commodity options. The consultation is relevant to retail and institutional traders, exchanges (including NSE, BSE, and MCX), clearing corporations, brokers, and compliance teams.

NSE’s revised order-to-trade ratio framework for options

Separately, the National Stock Exchange of India (NSE) has revised the order-to-trade ratio (OTR) framework for the equity derivatives options segment, with changes coming into effect from April 6 (Monday), in line with SEBI guidelines issued earlier in the year. The revised norms are aimed primarily at high-frequency and algorithmic traders whose order activity results in elevated OTR levels. Under the updated rules, orders placed within a range of (+/-) 40% of the last traded price (LTP) of the options premium or (+/-) Rs 20, whichever is higher, will be excluded from the OTR framework for imposing penalties related to high OTR. NSE clarified that no changes have been made to the OTR framework for the equity derivatives futures segment and the cash segment. In addition, a SEBI circular issued in February stated that algorithmic orders placed by designated market makers for market-making activities will not be included in OTR calculation, creating a specific exemption.

SEBI’s January 9 proposal to overhaul trading-related rules

On Friday, January 9, 2026, SEBI floated a proposal to comprehensively revamp the trading-related regulatory framework governing stock exchanges. The stated objective is simplifying rules, eliminating duplication, and easing compliance obligations across stock exchanges, including commodity derivatives platforms. SEBI invited public comments until January 30. In its consultation paper, SEBI recommended consolidating overlapping provisions into a single unified framework across equity and commodity segments, covering areas such as trading operations, price bands, circuit breakers, bulk and block deal disclosures, call auctions, liquidity enhancement schemes, margin trading facility (MTF), client codes, PAN requirements, trading hours, and daily price limits. The regulator also proposed shifting clearing corporation-specific provisions to a separate master circular to reduce overlap.

Compliance changes: disclosures, MTF, CCM and liquidity schemes

Within the January 9 proposal, SEBI suggested merging bulk and block deal disclosures and shifting dissemination to the client PAN level instead of the unique client code (UCC) level. It also proposed presenting market-wide circuit breaker norms, dynamic price band flexing, IPO price bands, and call auction procedures in a tabular format, while removing outdated operational examples. For MTF, SEBI proposed rationalisation that includes raising the minimum net-worth requirement for brokers from ₹3 crore to ₹5 crore or higher, as determined by exchanges. Timelines for net-worth certificates and auditor reports would be aligned with financial reporting cycles, and redundant due-diligence provisions would be eliminated. SEBI also proposed removing obsolete cash-segment market-making provisions and folding them into a principle-based Liquidity Enhancement Scheme (LES) framework across equities, derivatives, and commodities. Client Code Modification (CCM) rules were proposed to be liberalised to allow genuine error corrections, permit PAN-linked multiple UCCs for specific client categories, increase waiver frequency to once a month, and discontinue quarterly waiver reporting to SEBI.

Broader market structure: indices, large listings, and derivatives risk monitoring

Beyond operational simplification, SEBI has launched a consultation paper proposing stricter norms for non-benchmark indices used in derivatives. It proposed a minimum of 14 stocks for such indices, a maximum 20% weight per stock, and a cap of 45% on the combined weight of the top three stocks, with public comments invited until September 8. SEBI said exchanges could either create new indices or modify existing ones, and the proposal is set to impact BSE’s BANKEX and NSE’s Nifty Bank and Nifty Financial Services indices. SEBI has also proposed easing listing norms for very large companies, with a framework that would allow large issuers to dilute stakes more gradually while meeting the 25% minimum public shareholding (MPS) over a longer horizon. In the same set of proposals, SEBI indicated it plans to retain the 35% retail quota, reversing its earlier proposal to reduce it for IPOs above ₹5,000 crore, and invited feedback until September 8. Separately, SEBI proposed measures to strengthen risk monitoring in equity derivatives, including a shift to delta-based open interest calculations from notional open interest, a gross limit of 10,000 Cr (the higher of total long or short FutEq OI), and revising stock-level limits to the lower of 15% or 65 times the average daily delivery value in the cash market.

Securities Markets Code Bill, 2025: one code, fewer overlaps

Finance Minister Nirmala Sitharaman has introduced the Securities Markets Code Bill, 2025, which aims to replace three legacy laws with a unified framework. The bill proposes to merge the SEBI Act, 1992, the Securities Contracts (Regulation) Act, 1956, and the Depositories Act, 1996. It also proposes changes to how SEBI functions, including conflict-of-interest disclosures by board members, mandatory stakeholder consultation before regulations, and periodic review of regulations. The bill would allow SEBI to maintain a reserve fund and transfer surplus funds to the Consolidated Fund of India. It also enables regulatory sandboxes to test new financial products in a controlled environment. The draft proposes separating investigation from decision-making, introducing a single adjudication mechanism, and setting timelines for enforcement actions, while shifting minor procedural violations to civil penalties linked to gains made or losses caused.

Key proposals and timelines at a glance

Market impact: what changes in day-to-day operations

If SEBI proceeds with the harmonised base price and price band framework, it could reduce visible price divergence between exchanges in securities that are thinly traded on some venues. For exchanges, the proposal implies tighter operational coordination, especially around sharing closing-price data and aligning the next day’s price band parameters. In derivatives, a uniform strike price framework and the ability to introduce strikes intraday could change how traders manage hedges and roll positions, while placing a premium on consistent contract governance across exchanges. The OTR changes for equity options narrow the set of orders included for penalty purposes by excluding activity close to the options premium LTP, which directly affects how high-order strategies are measured. For brokers and compliance teams, consolidation of circulars and harmonised penalty structures could reduce duplication of controls, but will still require updates to monitoring systems and client communications. Meanwhile, index broadening proposals for non-benchmark derivative indices can alter concentration characteristics of widely traded index derivatives, affecting risk models and portfolio exposures tied to those indices.

Why the direction matters: a single rulebook theme

Across these proposals, SEBI’s consistent direction is to reduce fragmentation between exchanges and between asset classes. A harmonised approach to base prices, strike price introduction, and trading-rule consolidation reduces scope for inconsistent outcomes driven purely by where a trade occurs. The consultation-driven approach also signals that implementation will likely involve operational details such as data-sharing arrangements, formats, and surveillance thresholds. At the same time, the derivatives risk proposals point to a parallel objective: improving measurement of risk through delta-based open interest and defined limits. The Securities Markets Code Bill, 2025, if enacted, would further support the “single framework” theme by consolidating multiple statutes and making consultation and periodic review more explicit in the law.

Conclusion

SEBI’s 2026 proposals span equity price band harmonisation, options contract design, OTR measurement for equity options, a broader rewrite of trading-related rules, and tighter derivatives risk monitoring. In parallel, the Securities Markets Code Bill, 2025, proposes a consolidated legal backbone for capital markets regulation. The immediate next steps across several items are defined by consultation timelines, including SEBI’s Jan 30 deadline for the trading-framework revamp paper and Sep 8 deadlines for feedback on non-benchmark indices and eased listing norms for large companies. Market participants will be watching how SEBI and exchanges translate these proposals into operational rules, especially where cross-exchange coordination and system changes are required.