Direct tax professionals have written to Sebi chairman Ajay Tyagi requesting the regulator to extend the dates of the one-time settlement scheme for entities that have executed trade reversals in the stock options segment on the Bombay Stock Exchange.

In an analysis of the stock options segment of the BSE between April 1, 2014 and September 30, 2015, Sebi observed an anomaly where several entities were consistently seen making significant losses on their trades, which were reversed by the same counterparties either on the same day or the next day.

Of the 21,652 entities that executed trade on BSE stock options segment, a total of 14,720 entities were involved in the generation of artificial volumes by executing non-genuine/reversal trades on the same day.

Accordingly Sebi came out with a settlement scheme in July against those entities that had executed trade reversals in the stock option segment during the period against whom any proceedings are pending. The scheme commenced in August 2020 and could be availed till October 31, 2020. The Direct Tax Professionals Association have urged the regulator to extend the date till March 31, 2021.

“Considering the pandemic and the large number of cases, the dates of the scheme should be extended,” said Narayan Jain, chairman of the DTPA representation committee.

Mamta Binani, former president of the Institute of Company Secretaries and co-chairperson of the DTPA representation committee, said the three parameters considered by Sebi to determine the indicative settlement amount are artificial volume, number of non-genuine trades and number of contracts resulting in creation of artificial volume/non-genuine trades. The association has urged the regulator that the settlement amount should not be based on the volume of transactions, but on the net profit/loss resulting from the alleged transactions.

Stocks recoil

The Sensex crashed 600 points while the Nifty slumped below the 11750-mark on Wednesday, in tandem with a deep global selloff as a second wave of coronavirus cases in Europe and the US stoked fears of another round of lockdowns. After hitting a low of 39,774.60 during the day, the 30-share BSE Sensex ended 599.64 points, or 1.48 per cent lower, at 39922.46.