Market regulator Sebi has extended till December 31 the one-time settlement scheme for entities that executed reversal of trades in the stock options segment of the BSE during 2014 and 2015.

The settlement scheme, introduced by the regulator in July, commenced on August 1, 2020 and was supposed to end on October 31, 2020.

However, amid the disruption caused by the pandemic, Sebi received many representations seeking extension of the period of the scheme, the regulator said in a public notice issued late on Saturday.

“Upon consideration of the same, the authority has approved the extension of the period of the scheme till December 31, 2020,” it added.

The Direct Taxes Professionals’ Association (DTPA) welcomed Sebi’s move. However, Narayan Jain, chairman of the DTPA representation committee, urged the market regulator to review the scheme and lower the settlement fee.

“The minimum settlement fee as prescribed is Rs 5 lakh which is prohibitive in small cases. Rather there should be no prosecution in smaller cases where up to two transactions have been made. There is widespread resentment as the transactions are of 2014-2015 and so long BSE and Sebi did not find any fault with such reversal tradings,” Jain noted.

According to the notice issued by Sebi in July, entities who do not avail the one-time settlement opportunity will be liable for action after the expiry of the scheme.

An entity willing to make an application for a one-time settlement under the scheme is required to submit an application in the specified format along with the applicable application fee, it had said.

Under the scheme, the entities which executed trade reversals on the stock options segment of the BSE during April 1, 2014 to September 30, 2015 and against whom any proceedings are pending, are eligible to avail the settlement opportunity.

To arrive at an indicative settlement amount, Sebi considered three objective parameters - artificial volume, number of non-genuine trades and number of contracts resulting in creation of artificial volume or non-genuine trades. Further, a uniform consolidated settlement factor in all cases wherein the entities had executed reversal trades would be applicable.