Description

SEBI adjudication order against Hasina Kasambhai Shekh for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial volumes and misleading appearance of trading.

Summary

SEBI issued an adjudication order against Hasina Kasambhai Shekh (PAN: BFHPS4813N) for executing non-genuine reversal trades in illiquid stock options on BSE during the period April 1, 2014 to September 30, 2015. The investigation revealed that 81.38% of all trades (2,91,643 trades) executed in BSE’s stock options segment during this period involved reversal of buy and sell positions, creating artificial volumes and false appearance of trading. The Noticee was one of 14,720 entities found to have engaged in such manipulative trading practices. Adjudication proceedings were initiated for alleged violations of SEBI PFUTP Regulations.

Key Points

  • Investigation covered period from April 1, 2014 to September 30, 2015
  • 2,91,643 reversal trades identified, comprising 81.38% of all stock options trades on BSE
  • 14,720 entities found involved in non-genuine trading activities
  • Reversal trades involved entities reversing buy/sell positions with same counterparty in same contract
  • Trades lacked basic trading rationale and created artificial volumes
  • Show Cause Notice issued on August 08, 2022
  • Case transferred to new Adjudicating Officer on April 04, 2025
  • Alleged violations of regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations

Regulatory Changes

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

Compliance Requirements

This order serves as a reminder to all market participants to:

  • Avoid executing non-genuine reversal trades that lack trading rationale
  • Refrain from creating artificial volumes or false appearance of trading
  • Ensure all trading activities comply with PFUTP Regulations
  • Maintain genuine trading intent and avoid manipulative practices in stock options segment

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice: August 08, 2022
  • AO Appointment: April 04, 2025 (transfer to new Adjudicating Officer)
  • Order Number: Order/JS/YK/2025-26/31963

Impact Assessment

Market Impact: Low - This is an individual enforcement action against a single entity for historical violations that occurred over 10 years ago. While part of a larger investigation into 14,720 entities, this specific order does not impose market-wide restrictions or introduce new compliance obligations.

Operational Impact: Negligible - No operational changes required for market participants. The order reinforces existing prohibitions against manipulative trading practices in the stock options segment.

Systemic Significance: The investigation revealed widespread manipulation in BSE’s illiquid stock options segment during 2014-2015, with reversal trades constituting over 81% of total trading activity. However, the current enforcement action targets only one participant from that historical period.

Impact Justification

Individual enforcement action against single entity for historical violations (April 2014-September 2015). Part of broader investigation into 14,720 entities. No systemic regulatory changes or market-wide impact. Show cause notice issued August 2022, case transferred to new adjudicating officer April 2025.