Why did Zerodha send an email seeking clarification for the reversal trades?

SEBI mandates all stockbrokers to track and report trading activity that is not performed in the normal course of transactions. One such type of trade which has to be reported by stockbrokers is a reversal trade.

Reversal trades are alleged to be non-genuine trades where:

• The same client(s) or group of clients are both buyers and sellers in the same transaction.
• A reversal of transactions is made by the same client(s) or within the same group of clients at significantly different trade prices within a short period of time.
• One client makes a significant profit, and the other suffers a loss. These transactions are punched in an illiquid contract.