BSE Stock Options Case: 768 Entities to Benefit from Sebi’s Settlement Scheme 2024

A total of 768 entities settled cases related to alleged non-genuine transactions in the equity options segment on the BSE with Sebi under the settlement scheme introduced in 2024. markets The regulator on Monday announced that it has introduced the SEBI Settlement Scheme 2022, which allows entities to settle their cases. After the scheme was closed, the regulator continued legal proceedings against those who did not participate. Some of these entities challenged the decisions by appealing to the Securities Appellate Tribunal (SAT).

During a hearing in September 2023, the Court ordered that if a new settlement plan is introduced in the future, the appellants would be eligible to benefit from it and the plan would cover their cases.

Accordingly, the Securities and Exchange Board of India (Sebi) has introduced the ‘ISO Liquidation Scheme, 2024’ to provide an opportunity to entities against which proceedings have been initiated and appeals against the proceedings are pending before any forum or authority.

The plan was initially maintained open from March 11 to May 10, but was extended until June 10 considering the interest of a large number of entities in taking advantage of the benefit.

“A total of 768 entities have benefited from the scheme and paid the specified settlement amount and legal costs respectively,” Sebi said in its settlement order. Most of the entities paid Rs 1.2 lakh or Rs 2.4 lakh as settlement charges. Accordingly, Sebi said, “The proceedings that have been initiated and are pending before any forum or authority for the violations… will be disposed of as regards the petitioners (768).” As part of surveillance, Sebi had observed several instances of transactions made by a group of entities dealing in the options segment of certain stocks listed on the Boston Stock Exchange. These transactions seemed abnormal, as they were found to always result in significant losses and then reverse with the same set of counterparties, either on the same day or the next day.

The regulator carried out a analysis from the BSE Equity Options segment from April 1, 2014 to September 30, 2015, following which it was confirmed that several entities were consistently incurring significant losses through their trades, while several others were consistently making significant profits, by executing reversal trades in the BSE Equity Options segment.

It was observed that trading took place in illiquid options of certain stocks in the F&O segment of the BSE.

It was further observed that out of 21,652 entities that had executed trades in the BSE Equity Options Segment, 14,720 entities were involved in generating artificial volumes by executing non-genuine or reversal trades on the same day, in violation of the PFUTP (Prohibition of Fraudulent and Unfair Trading). Trade Rules of practice).