Description

SEBI imposes adjudication order against Shyam Sunder Vyas HUF for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial volumes.

Summary

SEBI issued Adjudication Order No. Order/JS/YK/2025-26/31759 against Shyam Sunder Vyas HUF (PAN: AARHS2429E) under Section 15-I of SEBI Act, 1992 for engaging in non-genuine reversal trades in illiquid stock options on BSE during April 1, 2014 to September 30, 2015. The investigation revealed that 81.41% of all trades (2,91,744 trades) in BSE’s stock options segment during this period involved reversal of buy and sell positions by clients and counterparties, creating artificial volumes and false appearance of trading. The Noticee was one of 14,720 entities found to have executed such manipulative trades.

Key Points

  • SEBI investigated large-scale reversal of trades in illiquid stock options on BSE for the period April 1, 2014 to September 30, 2015
  • Total of 2,91,744 trades comprising 81.41% of all trades in stock options segment were non-genuine reversal trades
  • Entities reversed their buy or sell positions in contracts with subsequent opposite positions with the same counterparty
  • 14,720 entities were identified as having executed non-genuine trades during the investigation period
  • Shyam Sunder Vyas HUF was found to have indulged in execution of reversal trades creating false or misleading appearance of trading
  • Show Cause Notice dated August 04, 2022 was issued to the Noticee
  • Adjudicating Officer was appointed on April 04, 2025 following transfer from erstwhile AO

Regulatory Changes

No new regulatory changes introduced. This order enforces existing provisions under SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003, specifically regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a).

Compliance Requirements

  • Market participants must refrain from executing reversal trades that lack trading rationale and create artificial volumes
  • Trades must have genuine economic purpose and not create false or misleading appearance of trading activity
  • Entities must not engage in manipulative or deceptive trading practices in stock options or any securities market segment
  • Broker-dealers and trading members should monitor client trading patterns for non-genuine reversal trades

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice: August 04, 2022
  • AO Appointment: April 04, 2025
  • Order Date: October 30, 2025 (implied from circular date)

Impact Assessment

Market Impact: Low - This is a retrospective enforcement action against a single HUF entity for violations that occurred over a decade ago (2014-2015). The order addresses historical misconduct rather than current market practices.

Operational Impact: Low - No impact on current trading operations. The order serves as a deterrent against manipulative trading practices but does not introduce new compliance obligations beyond existing PFUTP regulations.

Precedential Value: Medium - Reinforces SEBI’s commitment to pursuing enforcement actions against entities engaged in artificial volume creation through reversal trades, even with significant time lag. Part of broader action against 14,720 entities involved in similar violations during the investigation period.

Impact Justification

Individual adjudication order against a single HUF entity for historical violations (2014-2015) in illiquid stock options. Limited market-wide impact as it addresses past misconduct by one participant among 14,720 entities involved.