SEBI says no further enquiry needed in the matter of Aryav Securities Private Limited
In the matter of dealing in Illiquid Stock Optionat BSE, the Securities and Exchange Board of India (SEBI) has concluded that no further inquiry against Aryav Securities Private Limited under Rule 4(3) of the Adjudication Rules was required and the proceedings have been disposedofin terms of Regulation 23 (1) of the SEBI (Settlement Proceedings) Regulations 2018.
SEBI had observed large scale reversal of trades in the Stock Options Segment of the BSE Limited (BSE) and, pursuant to this, it conducted investigation into the trading activities of certain entities in illiquid Stock Options at the BSE.
It was reported that during the Investigation Period, a total of 2,91,643 trades (comprising 81.38% of all the trades executed in the Stock Options Segment of BSE) involved reversal of buy and sell positions by the clients and counterparties in a contract.
These alleged non genuine trades resulted into creation of artificial volume to the tune of 826.21 crore units or 54.68% of the total market volume in Stock Options segment of BSE during the Investigation Period. Aryav Securities Private Limited (Noticee) was one of the several entities which was indulged in execution of such alleged non genuine trades.
In this case it was alleged that the Noticee, had created false or misleading appearance of trading in the aforementioned contracts in the Stock Option Segment of BSE and was alleged to have violated the provisions of Regulation 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the SEBI (Prohibitionof Fraudulent and Unfair Trading Practices related to Securities Markets) Regulations, 2003 (PFUTP Regulations).
The Adjudicating Officer (AO) put forth that SEBI came out with a Settlement Scheme (Scheme) in terms of Regulation 26 of SEBI (Settlement Proceedings) Regulations 2018 (Settlement Regulations)in the matter of trading in illiquid stock options at BSE.
Accordingly, the Scheme provided a one-time opportunity to the entitiesincluding the Noticeeagainst whom adjudication proceedings were approvedfor involvement in generation of artificial volumes by executing non-genuine/reversal trades on the same dayand which were in violation of the provisions of Regulations 3(a),(b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations, to settle the said pending proceedings.
In terms of the scheme, any entity desirous of availing the benefit of the scheme could avail the same by filling up the respective requisite details and paying the applicable settlement amount through the online platform made available on SEBI's website.
The Noticee availed the benefit of said scheme and remitted INR 14,72,500 as settlement amount specified under the said scheme and thus, settled the adjudication proceedings initiated against it vide the Show Cause Notice(SCN).
Taking these developments into account, the AO was of the opinion that no further inquiry under Rule 4(3) of the Adjudication Rules was required and the instant proceedings was liable to be disposed of in terms of Regulation 23 (1) of the Settlement Regulations, which provides that an Adjudicating Officer is obligated to dispose of the proceedings pending before him on the basis of the approved settlement terms by an appropriate order.