Entities engaging in reversal trades, characterized by reversing trades with the same counterparties on the same day at a significant price difference without valid reasons, have been granted permission to settle with the market regulator.
These trades, deemed artificial and non-genuine by the market regulator, are often employed by fraudulent entities to manipulate securities’ prices and volumes, typically involving illiquid stock options (ISOs). The Illiquid Stock Options (ISO) Scheme, 2024, initiated by the Securities and Exchange Board of India (Sebi), targets entities involved in the ISO segment of the Bombay Stock Exchange (BSE) facing proceedings. Effective from March 11, 2024, to May 20, 2024, or another approved date, the scheme offers a settlement opportunity.
Details of the scheme will be accessible on Sebi and BSE websites starting March 11, 2024. According to the public notice issued on March 6, the scheme aims to provide settlement options to entities involved in reversal trades in stock options between April 01, 2014, and September 30, 2015, with ongoing proceedings before various authorities or forums, including Adjudicating Officer, Securities Appellate Tribunal (SAT), Courts, or Recovery Officer (in case of pending appeals before SAT/Court).
The notice emphasizes that participating entities can settle pending proceedings through the scheme, avoiding prolonged legal processes and expenses.
Entities failing to utilize this settlement opportunity may face continued action under relevant securities laws after the scheme’s expiration, as outlined in the regulator’s public notice.
