SEBI Announces Fourth Settlement Scheme for Eligible Illiquid Stock Options Cases

The Securities and Exchange Board of India (SEBI) is set to introduce a fourth settlement scheme for cases involving illiquid stock options (ISO), as per news reports. 

It relates to regulatory proceedings arising from non-genuine trades carried out on the BSE. The trades covered by the scheme were executed between April 1, 2014, and September 30, 2015.  

The scheme will apply to cases where proceedings remain pending before an adjudicating officer, the Securities Appellate Tribunal (SAT), courts, or a recovery officer. 

Previous Settlement Schemes 

SEBI had earlier brought similar settlement schemes in 2020, 2022 and 2024. A large number of entities involved in the cases settled the proceedings under the earlier schemes. 

The latest scheme was approved by SEBI's competent authority based on recommendations made by the High Power Advisory Committee (HPAC). It was subsequently placed before the SEBI Board for information. 

Settlement Amount 

The amount payable will depend on the number of contracts involved in a case. For entities with one to five contracts, the settlement amount has been fixed at ₹1.44 lakh. 

For six to 50 contracts, the amount will be ₹2.88 lakh. Where an entity has 51 contracts or more, the amount will be ₹7.2 lakh plus ₹14,400 for each contract. 

Under this calculation, an entity with 51 contracts would pay ₹14.544 lakh. The amount therefore increases once the number of contracts crosses the 50-contract threshold. 

Application Details 

SEBI said the process and other details for filing applications under the scheme will be announced separately. The regulator has not yet set out those filing modalities in the information provided. 

The settlement scheme has been introduced under Section 15JB of the SEBI Act, 1992, read with Regulation 26 of the SEBI (Settlement Proceedings) Regulations, 2018. 

Read More: SEBI Revises PMS Rules, Allows FPIs to Enter Non-Agricultural Commodity Derivatives! 

Conclusion 

The fourth settlement scheme covers pending proceedings linked to non-genuine BSE illiquid stock option trades from 2014 and 2015. The amount payable will be based on the number of contracts involved. 

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