Markets regulator Sebi Thursday slapped a total punishment of Rs 13 lakh on two entities for non-genuine trades in illiquid stock option on the BSE.
The two entities are Bhiragacha Finance Company and Blue Bird Mercantiles Pvt Ltd, according to Sebi’s two separate but similarly worded orders.
The Securities and Exchange Board of India (Sebi) conduct an examination into the trading activity in illiquid stock options on the BSE from April 2014 to September 2015 after observing large-scale turnaround of trades in the bourse’s stock options segment.
The regulators experimental that the entities intentionally adopted the strategy to enter into turnaround trades with same counterparties and that too at price incur losses to them.
“Facts show that these trades were executed with accuracy to match with the same counterparty to create reproduction volume in these contracts and create a deceptive appearance of trading,” Securities and Exchange Board of India (Sebi) said.
The acts of creating artificial volume violate the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, the regulator said.
Accordingly, Sebi compulsory a fine of Rs 8 lakh on Blue Bird Mercantile and Rs 5 lakh on Bhiragacha Finance.
The orders are in line with Sebi’s statement in April 2018 to take action in a phased manner against 14,720 entities for deceitful trade in the illiquid stock options segment. Since October, the regulator has passed more than 55 orders against such entities.