Description

SEBI imposes penalty on Ms. Ritu Agarwal for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial volumes and false appearance of trading.

Summary

SEBI issued Adjudication Order No. Order/JS/DP/2025-26/31758 against Ms. Ritu Agarwal (PAN: ACBPC0253E) for executing non-genuine reversal trades in illiquid stock options on BSE during the investigation period from April 1, 2014 to September 30, 2015. The investigation revealed that 2,91,744 trades comprising 81.41% of all trades executed in BSE’s stock options segment involved reversal of buy and sell positions, creating artificial volumes and false appearance of trading. Ms. Agarwal was one of 14,720 entities found to have executed such non-genuine trades.

Key Points

  • Ms. Ritu Agarwal charged with executing reversal trades in illiquid stock options on BSE between April 1, 2014 and September 30, 2015
  • Investigation revealed 2,91,744 reversal trades representing 81.41% of all trades in BSE stock options segment during the period
  • Reversal trades involved entities reversing their buy or sell positions in a contract with subsequent opposite positions with the same counterparty
  • Such trades lacked basic trading rationale and created false or misleading appearance of trading
  • Total of 14,720 entities found involved in executing non-genuine trades in BSE’s stock options segment
  • Alleged violations of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 - specifically regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a)
  • Show Cause Notice dated October 27, 2021 issued to the Noticee
  • Adjudicating Officer appointed on April 03, 2025 under Section 15-I of SEBI Act, 1992

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action under existing SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

Compliance Requirements

This is an individual adjudication order. Market participants should:

  • Avoid executing reversal trades that lack genuine trading rationale
  • Ensure trading activities do not create artificial volumes or false appearance of trading in any securities
  • Comply with PFUTP Regulations prohibiting fraudulent, manipulative and deceptive trading practices
  • Maintain proper documentation and justification for all trading decisions, particularly in illiquid contracts

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice Date: October 27, 2021
  • AO Appointment Date: April 03, 2025
  • Adjudication Order Date: October 30, 2025

Impact Assessment

Market Impact: Minimal current market impact as this relates to historical trading violations from 2014-2015 in illiquid stock options segment.

Operational Impact: Limited to the individual entity (Ms. Ritu Agarwal). Part of broader enforcement action against 14,720 entities involved in similar practices.

Precedent Value: Reinforces SEBI’s stance against artificial volume creation and reversal trades lacking genuine trading rationale, particularly in illiquid segments. Demonstrates continued enforcement action even for historical violations.

Regulatory Signal: SEBI continues systematic action against entities involved in creating false appearance of trading through reversal trades in stock options, emphasizing market integrity in derivative segments.

Impact Justification

Individual adjudication order against single entity for historical violations (2014-2015). No systemic regulatory changes or market-wide impact. Enforcement action part of larger investigation involving 14,720 entities.