Sebi extends Settlement Scheme on illiquid option cases to January 21 amid good response

Market regulator Sebi said the SEBI Settlement Scheme 2022 for entities related to trading in illiquid stock options has been extended to January 21, 2023, thanks to a large number of entities having shown interest in availing the scheme.

"It has been observed that during the last few days, large number of entities have shown interest in availing the Scheme. Considering the interest of entities in availing the Scheme, the competent authority has extended the period of the Scheme till January 21, 2023," Sebi said.

The settlement scheme commenced on August 22 and was to end on Monday.

Sebi had on August 19 introduced the Settlement Scheme, 2022, which provided a one-time settlement opportunity to those entities that have executed trade reversals in the stock options segment of BSE during the period from April 1, 2014 to September 30, 2015 and against whom adjudication proceedings were initiated and were pending before any forum or authority.

Entities against whom orders have been passed levying penalty that has not been paid and against whom recovery proceedings have been initiated, were eligible for the scheme, only if an appeal is filed and the same is pending before the Courts/ SAT.

Last week, PTI reported quoting sources that a total of 7,000 entities had already applied under the scheme. Most of the entities can settle their proceedings by paying only Rs 1 lakh as a settlement amount, the report suggested.

This was not the first time the regulator has given the chance to the entities to settle cases. In 2020, the capital market regulator had provided a one-time settlement scheme for such entities. Initially, the scheme was available from August 1 to October 31, 2020, but later extended till December 31, 2020, in view of the large-scale disruption caused by Covid.

The advantage of participation in the scheme is that entities are not subjected to further quasi-judicial proceedings on the same matter. The settlement is also done without admission of guilt, PTI reported last week.

Over 14,000 entities had indulged in reversal trades in options, which were illiquid.  Reverse trades are trades in which a trader buys a particular stock and sells it back to the same person.