Description

SEBI imposes penalty on Parasmani Tradelink Private Limited for executing non-genuine reversal trades in illiquid stock options at BSE during April 2014 to September 2015, creating artificial volumes.

Summary

SEBI issued an adjudication order against Parasmani Tradelink Private Limited (PAN: AAECP7154K) for engaging in non-genuine reversal trades in illiquid stock options at BSE during April 1, 2014 to September 30, 2015. The entity executed 2 non-genuine trades in 1 stock options contract, resulting in artificial volume of 200,000 units. The order was issued under Section 15-I of SEBI Act, 1992 for violations of PFUTP Regulations, 2003. The adjudicating officer, initially appointed as Mr. Deepesh M. U. in July 2021, was later transferred, with a new AO appointed on April 4, 2025.

Key Points

  • Investigation revealed 2,91,744 trades (81.40% of all trades) in BSE stock options segment were non-genuine during the investigation period
  • Parasmani Tradelink Private Limited executed 2 non-genuine reversal trades creating artificial volume of 200,000 units
  • Trades were alleged to be manipulative and deceptive, creating false or misleading appearance of trading
  • Show Cause Notice issued on August 26, 2021 under Rule 4(1) of SEBI Adjudication Rules
  • Proceedings initiated for violations of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003
  • Penalty consideration under Section 15HA of SEBI Act, 1992

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action under existing PFUTP Regulations, 2003 provisions regarding fraudulent and unfair trade practices.

Compliance Requirements

  • Market participants must refrain from executing reversal trades or non-genuine trades in stock options that create artificial volumes
  • Trading activities must not create false or misleading appearance of trading in securities
  • Entities must ensure compliance with Regulations 3 and 4 of PFUTP Regulations, 2003 prohibiting manipulative, deceptive and fraudulent practices
  • All trades in illiquid stock options must be genuine with actual intent to trade

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Initial AO Appointment: July 2, 2021 (communicated July 6, 2021)
  • Show Cause Notice Date: August 26, 2021
  • AO Transfer/New Appointment: April 4, 2025
  • Order Date: December 2025

Impact Assessment

This adjudication order reinforces SEBI’s continued vigilance against market manipulation through non-genuine trades in illiquid stock options. The case demonstrates SEBI’s commitment to maintaining market integrity even for violations that occurred nearly a decade ago. The finding that over 81% of stock options trades at BSE during the investigation period were non-genuine highlights systemic issues in illiquid derivatives trading. While this specific order affects only one entity with minimal trading volume (2 trades, 200,000 units), it serves as a deterrent for similar manipulative practices. Market participants engaged in options trading should ensure genuine intent and avoid creating artificial volumes through reversal trades. The order sets precedent for penalty imposition under Section 15HA for PFUTP violations in derivatives segments.

Impact Justification

Adjudication order against a single entity for historical violations (2014-2015). Sets precedent for penalty enforcement in manipulative stock options trading but has limited broader market impact.