The SEBI Settlement Scheme 2022 for entities related to trading in illiquid stock options will end on November 21. More than 7,000 entities have so far paid the settlement amount, sources close to the development said.

The scheme allowed settlement for entities that have executed “reversal trades” in the illiquid stock options segment of BSE between April 1, 2014, and September 30, 2015, and against whom enforcement action initiated by SEBI is pending. SEBI had observed that over 14,000 entities had indulged in “reversal trades” in options that were illiquid. 

Its investigation had found that entities entered into “reversal trades” with each other on the same day at different prices, thereby shifting gains from one to the other. 

A “reversal trade” is where a person buys a particular stock and sells it back to the same person. 

SEBI ruled these trades as non-genuine and a misuse of the stock exchange platform. It initiated adjudication proceedings against these entities. 

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Market observers say the current settlement scheme is easier as entities can apply online, without need for physical papers. Most of the entities can settle by paying ₹ 1 lakh. 

Another advantage in the scheme is that entities will not face further quasi-judicial proceedings in the matter. The settlement is done without admission of guilt. 

SEBI had rolled out the scheme after the Securities Appellate Tribunal had in May this year urged it to offer a fresh one-time settlement scheme.

The scheme is open to any client facing proceedings before any forum or authority, namely, courts/ Securities Appellate Tribunal, SEBI adjudicating officer, and so on.

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