SEBI Margin & OTR Rules: What F&O Traders Must Know

SEBI's New F&O Rules Are Already Repricing Risk SEBI's revised Order-to-Trade Ratio (OTR) framework and the new 50% cash collateral mandate took effect on April 6, 2026. These aren't incremental tweaks. Together, they represent a structural compression of how India's equity derivatives market operates — who can trade, how much they can trade, and what it costs them to do so. For retail F&O participants and the brokerages that profit from them, the ground has shifted. The OTR rule targets high-frequency and algorithmic traders flooding the options order book with excessive order activity relative to actual executed trades. The cash collateral rule is arguably the sharper edge: brokers and clients who have historically pledged stock holdings as margin now must ensure at least 50% of total collateral sits in cash or cash equivalents. That instantly reduces effective buying power for traders who are long on equities but short on liquidity. This is a deliberate friction point, not an administrative formality. The uncomfortable question the market hasn't fully priced in: how many retail F&O traders in India actually hold 50% of their collateral in cash? The answer, if brokerage deposit patterns from FY25 are any guide, is: not many. Brokerages Face a Revenue Squeeze — Some More Than Others [Angel One](/stock/ANGELONE) (NSE: ANGELONE) is the most exposed name in this conversation. Roughly 50–55% of Angel One's revenue is tied to F&O brokerage, and its client base skews heavily retail — exactly the demographic that relied on stock-pledging to build margin positions cheaply. The new cash collateral floor will either force clients to deposit more cash (reducing position sizes), cut activity, or exit the segment. None of those outcomes help Angel One's traded volume metrics. Its stock has already come under pressure in early April 2026, and a contraction in monthly active users in F&O wouldn't surprise anyone paying attention to the numbers. [Motilal Oswal Financial Serv...