Securities and Exchange Board of India (Sebi) has imposed fines on nine entities, including individuals, for indulging in non-genuine trades in stock options segment of BSE (Bombay Stock Exchange). The penalties totaled ₹45 lakh on all the entities.
Sebi said it has observed large scale reversal of trades in the stock options segment of the BSE, leading to the alleged creation of artificial volume in the stock options segment.
In this regard, Sebi had conducted an investigation into the trading activity in the illiquid stock options from April 2014 to September 2015.
The markets regulator said such trades were observed to be non-genuine in nature and created false or misleading appearance of trading in terms of artificial volumes in stock options and therefore alleged to be manipulative and deceptive in nature.
During the investigation, it was observed that these entities were among the various entities which indulged in execution of reversal trades in stock options segment of BSE.
Reversal trades are considered to be those trades in which an entity reverses its buy or sell positions in a contract with subsequent sell or buy positions with the same counterparty during the same day.
The said reversal trades are alleged to be non-genuine trades as they are not executed in normal course of trading, lack basic trading rationale, lead to false or misleading appearance of trading in terms of generation of artificial volumes, and hence are deceptive and manipulative, Sebi said.
By indulging in such trades, they violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.
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