NSE Payout Freeze: How One Alleged Unauthorised Trade Triggered An Rs 80 Crore Crisis

NSE Payout Freeze: A complaint over alleged unauthorised Nifty options trades has led the National Stock Exchange (NSE) to freeze payouts worth crores of rupees, leaving several traders unable to access their money while the matter is being investigated.

In a circular issued on May 6, the NSE said it had been directed by an enforcement authority on May 5 to halt all “fraudulent transactions/activities” executed in the complainant’s trading account. Following the directive, the exchange withheld fund payouts linked to certain counterparties involved in trades executed in specific equity derivatives contracts on the same day.

The exchange did not disclose the amount involved or the number of traders affected. However, a Sebi-registered research analyst Rakesh Bansal claimed in a post on X that nearly Rs 80 crore in payouts have been frozen, impacting more than 30 accounts.

According to Bansal, the incident took place on May 5, a weekly Nifty options expiry day, when a large unauthorised trade was allegedly carried out through the account of a client associated with a major brokerage firm. The trades were reportedly carried out in highly liquid Nifty options contracts, close to the strike price and near the prevailing market price.

The account holder later allegedly informed authorities that the trades had not been placed or authorised by them, following which a formal complaint was lodged. As per market practice, complaints involving suspected fraudulent activity are forwarded to enforcement authorities, which can then direct exchanges to withhold payouts pending investigation.

What has now alarmed market participants is the scale of the fallout. Since the disputed transactions involved Nifty options — one of India’s most actively traded derivatives segments — several ordinary traders who happened to be counterparties to those trades have also seen their payouts blocked, despite having no direct connection to the alleged fraud.

“Now their money is stuck — not because they did anything wrong, but because they were on the other side of those suspicious trades,” Bansal wrote on X.

The incident has sparked concerns among market participants about counterparty risk in India’s rapidly growing derivatives market, especially on high-volume expiry days when large trades are executed and settled within a short period.

NSE said the matter is currently under investigation. The exchange added that any further changes to the payout freeze, based on directions from the enforcement authority, will be communicated separately to trading members.