The Securities and Exchange Board of India has launched a fourth settlement window to resolve long-pending cases involving non-genuine trades in the illiquid stock options segment on the BSE from 2014-2015. This move allows entities to close ongoing legal proceedings by paying a fixed settlement fee, helping reduce the backlog in judicial and regulatory forums.
The Securities and Exchange Board of India has started a fourth settlement window to address old cases involving artificial trading in illiquid stock options. This specifically concerns trades executed on the Bombay Stock Exchange between April 1, 2014, and September 30, 2015. These trades were earlier flagged by the regulator for being non-genuine or appearing to create fake volumes without actual intent to trade.
Over the years, this investigation led to thousands of enforcement proceedings against various market entities, creating a significant pile-up of cases at the Securities Appellate Tribunal and other legal forums. This initiative provides a way for eligible parties currently facing these enforcement actions to resolve their matters without continuing lengthy litigation. By paying a predetermined settlement charge, the involved parties can close these cases.
Fee Structure for Settlement
The financial cost to settle depends on the number of contracts an entity traded during the specified period. For entities that traded between one and five contracts, the settlement fee is set at ₹1.44 lakh. For those with six to 50 contracts, the fee increases to ₹2.88 lakh. For larger volumes of 51 contracts or more, the obligation starts at ₹7.2 lakh, plus an additional ₹14,400 for every individual contract beyond that 51-contract threshold. For instance, an entity with 51 contracts would be liable for ₹14.544 lakh.
Clearing the Regulatory Backlog
This is the fourth time the regulator has offered such a window, with previous opportunities provided in 2020, 2022, and 2024. The move is based on recommendations from the High Power Advisory Committee, which aimed to streamline the resolution process and reduce the strain on judicial resources. The regulator is expected to release specific filing details and guidelines in the coming days to help applicants complete the documentation and payment process under the SEBI Act of 1992. The success of this window will depend on how many pending cases are cleared, potentially reducing the overall load on the appellate tribunal and other courts.