Description

SEBI imposes penalty on Rahul Fiscal & Credit Co. Pvt. Ltd. for executing non-genuine reversal trades in Illiquid Stock Options on BSE during April 2014 to September 2015, violating PFUTP Regulations.

Summary

SEBI’s Adjudicating Officer issued an order against Rahul Fiscal & Credit Co. Pvt. Ltd. (PAN: AACCR4625F) for participating in non-genuine reversal trades in Illiquid Stock Options (ISO) on BSE during the investigation period of April 1, 2014 to September 30, 2015. The trades were found to have created artificial volumes and false or misleading appearances of trading activity, in violation of SEBI’s PFUTP Regulations.

Key Points

  • SEBI investigated large-scale reversal trades in BSE’s Illiquid Stock Options segment for the period April 1, 2014 to September 30, 2015.
  • A total of 2,91,744 trades — constituting 81.41% of all trades in BSE’s stock options segment — were identified as reversal trades involving the same counterparties.
  • 14,720 entities were found to have executed non-genuine trades; Rahul Fiscal & Credit Co. Pvt. Ltd. was among them.
  • The entity’s trades were alleged to be manipulative and deceptive, creating artificial volumes without genuine trading rationale.
  • 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.
  • A Show Cause Notice was issued on September 13, 2021; the current AO was appointed on April 04, 2025 following transfer of the case.
  • Adjudication proceedings initiated under Section 15-I of the SEBI Act, 1992 read with Rule 5 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995.
  • Penalty provisions invoked under Section 15HA of the SEBI Act.

Regulatory Changes

No new regulatory changes introduced. This order applies existing provisions of the PFUTP Regulations, 2003 and Section 15HA of the SEBI Act, 1992 to penalise manipulative trading conduct.

Compliance Requirements

  • Market participants must ensure all trades in stock options reflect genuine economic intent and are not structured as coordinated reversal trades with the same counterparties.
  • Entities must avoid trades that create artificial volumes or false appearances of market activity.
  • Compliance with Regulations 3 and 4 of PFUTP Regulations is mandatory for all market participants trading in derivatives segments.

Important Dates

  • Investigation Period: April 1, 2014 – September 30, 2015
  • Show Cause Notice Issued: September 13, 2021
  • AO Appointment (current): April 4, 2025
  • Order Reference: Order/JS/DP/2025-26/32232
  • Order Date: March 18, 2026

Impact Assessment

This order is part of SEBI’s sustained enforcement campaign against manipulation in BSE’s Illiquid Stock Options segment, which saw widespread coordinated reversal trading. The direct market impact is limited as the violations occurred over a decade ago and the segment has since been restructured. However, the order reinforces SEBI’s long-term commitment to pursuing enforcement actions regardless of elapsed time, serving as a deterrent to similar conduct. Entities involved in the broader ISO investigation (14,720 total) should expect continued adjudication proceedings.

Impact Justification

Enforcement action against a single entity for historical trading violations (2014-2015); part of SEBI's broader crackdown on BSE illiquid stock options manipulation involving 14,720 entities. No ongoing market impact but signals continued enforcement of PFUTP regulations.