Description

SEBI adjudication order against Archana 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/2025-26/32033 against Archana Agarwal (PAN: AFCPA6409C) under Section 15-I of SEBI Act, 1992 for violations related to executing non-genuine reversal trades in illiquid stock options on BSE. During the investigation period (April 1, 2014 to September 30, 2015), SEBI observed large-scale reversal of trades creating artificial volumes. The investigation revealed that 2,91,744 trades comprising 81.41% of all trades in BSE’s stock options segment involved reversal of buy and sell positions, creating false or misleading appearance of trading. Archana Agarwal was identified as one of 14,720 entities who indulged in such non-genuine reversal trades.

Key Points

  • Investigation period: April 1, 2014 to September 30, 2015
  • 2,91,744 reversal trades identified, representing 81.41% of all trades in BSE stock options segment
  • Total 14,720 entities found executing non-genuine trades in BSE’s stock options segment
  • Archana Agarwal executed reversal trades where buy/sell positions were reversed with same counterparty
  • Trades allegedly lacked basic trading rationale and created artificial volume
  • Show Cause Notice issued on August 10, 2022
  • New Adjudicating Officer appointed on April 04, 2025 following transfer from erstwhile AO

Regulatory Changes

No new regulatory changes. This is an enforcement action based on existing regulations.

Compliance Requirements

  • Entities trading in stock options must ensure genuine trading rationale
  • Reversal trades with same counterparties that create artificial volumes are prohibited
  • Trading activities must not create false or misleading appearance of trading
  • All trades must comply with PFUTP Regulations to avoid manipulative and deceptive practices

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice: August 10, 2022
  • AO Appointment (current): April 04, 2025
  • Order Publication Date: February 5, 2026

Impact Assessment

Market Impact: Low - This is an individual enforcement action related to historical violations from 2014-2015 in the illiquid stock options segment, which has limited current market relevance.

Regulatory Impact: Medium - Reinforces SEBI’s continued focus on investigating and prosecuting market manipulation cases, particularly reversal trades creating artificial volumes, even for violations several years old.

Operational Impact: Low for broader market participants. Serves as reminder that entities executing trades in stock options must maintain genuine trading rationale and avoid creating false appearance of trading activity.

Violations Alleged: Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

Impact Justification

Individual adjudication order for historical violations (2014-2015) involving non-genuine reversal trades in illiquid stock options. Part of broader investigation into 14,720 entities. High severity for the individual but low market-wide impact as it relates to past enforcement action in a specific segment.