Description

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

Summary

SEBI issued an adjudication order (Order/JS/DP/2025-26/31959) against Hacxad Infotech Private Limited (PAN: AACCH9458G) for violations related to non-genuine trading in illiquid stock options on BSE. The entity was found to have executed reversal trades during April 1, 2014 to September 30, 2015, which created false or misleading appearance of trading through artificial volumes. The company was among 14,720 entities identified in SEBI’s investigation that revealed 2,91,744 trades (81.41% of all trades) in BSE’s stock options segment involved reversal of buy and sell positions lacking basic trading rationale.

Key Points

  • SEBI investigated large-scale reversal of trades in illiquid stock options on BSE between April 1, 2014 and September 30, 2015
  • Total of 2,91,744 trades comprising 81.41% of all trades in stock options segment involved position reversals
  • 14,720 entities were found to have executed non-genuine trades during the investigation period
  • Hacxad Infotech Private Limited executed reversal trades where entities reversed buy/sell positions in contracts with same counterparty
  • These trades lacked basic trading rationale and created artificial volumes
  • Trades were deemed manipulative and deceptive in nature
  • Show Cause Notice issued on August 04, 2022
  • Adjudicating Officer appointed on April 04, 2025 under Section 15-I of SEBI Act

Regulatory Changes

No new regulatory changes introduced. This order enforces existing SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

Compliance Requirements

  • Market participants must ensure trades have genuine trading rationale and economic purpose
  • Entities must avoid reversal trades with same counterparties that create artificial volumes
  • Trading activities must not create false or misleading appearance of trading in securities
  • Compliance with Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations is mandatory

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice Issued: August 04, 2022
  • Adjudicating Officer Appointment: April 04, 2025
  • Order Date: January 12, 2026

Impact Assessment

Market Impact: Low current impact as violations occurred over a decade ago (2014-2015) in the illiquid stock options segment of BSE, which has limited market participation.

Operational Impact: This enforcement action serves as a deterrent against manipulation in illiquid derivative segments. The identification of 14,720 entities suggests widespread market abuse during that period, though the current operational impact is minimal given the historical nature.

Regulatory Significance: Demonstrates SEBI’s continued focus on maintaining market integrity even for historical violations and its ability to pursue large-scale investigations involving thousands of entities engaged in coordinated manipulation schemes.

Impact Justification

High severity enforcement action against market manipulation, but low current impact as it relates to historical violations from 2014-2015 by a single private limited company in illiquid stock options segment