India's Securities and Exchange Board of India (SEBI) issued an interim order barring Copthall Mauritius Investment Ltd. a Mauritius-based JPMorgan unit, and local firm Mansi Share and Stock Broking Ltd. from the capital market over allegations of manipulating the country's newly introduced auction-based closing price system.
SEBI impounded ₹3.7 crore in wrongful gains. Board member Kamlesh Varshney detailed in a 46-page order that the firms placed large orders in Sensex stocks during the closing auction window on Aug. 13, 2026, then canceled large portions of those orders without fully executing the trades. The orders accounted for more than 90 percent of trading volume in specific securities at times.
The regulator identified the strategy as designed to influence the indicative equilibrium price of the BSE Sensex Index while benefiting the firms' options positions. The firms' underlying securities trading during the auction window precisely mirrored their expiry-day Sensex options positions, according to Varshney's order. By placing and canceling orders, the firms avoided potential losses while realizing profits from derivatives that would have otherwise expired worthless.
SEBI introduced the auction-based closing system in August 2026 to determine closing prices for over 200 stocks in India's $5.1 trillion stock market. The system aims to align India's practices with global standards and reduce manipulation.
Traders have raised concerns about the system's vulnerability since its launch, with reports of unexplained spikes in stock benchmarks during closing sessions.
Copthall Mauritius and Mansi Share have 21 days to respond to the allegations and may request a personal hearing with SEBI.
The action follows SEBI's accusation a year ago against U.S. proprietary trading firm Jane Street Group for similar manipulation. Jane Street denied the allegations and is appealing the matter in Indian court.
