"Orders shall be matched and trades shall take place only if the trade price is within the reference price and execution range," NSE said in a circular on Friday.
"The guidelines augur well for better functioning of the market, as it would reduce the possibility of error led spike or kink in price of F&O participating stocks. This mechanism should come in very handy for smaller participants in the options segment as well," said Bhavin Desai, equity derivatives analyst Motilal Oswal Securities Ltd.
Also, India's capital markets regulator said in October it would unveil regulations for the cancellation or modification of trades arising from any instances of errant, or freak, trades on the country's stock exchanges.
India has experienced several instances of market glitches, including a flurry of erroneous orders placed by broker Emkay Global Financial Services last October, that have rattled confidence in the trading systems of the country's exchanges.