SEBI Cracks Down on Market Manipulation, Bans Two Entities for Illegal Sensex CAS Trades
MUMBAI, India – In a swift and decisive move, the Securities and Exchange Board of India (SEBI) has banned Copthall Mauritius Investments, a foreign fund, and Mansi Share & Stock Broking (MSSB) from market activities following allegations of manipulative trading in the recently introduced Closing Auction Session (CAS) for the Sensex. The regulatory action came just hours after SEBI Chairman Tuhin Kanta Pandey issued a stern warning against any attempts to exploit the new system.
The market regulator has ordered Copthall Mauritius Investments to impound nearly Rs 3 crore, while MSSB faces impounding of Rs 71.6 lakh. Both entities have been directed to appear before SEBI’s investigating officials within 21 days to address the charges.
SEBI alleges that on August 13th, Copthall Mauritius Investments engaged in manipulative trades within the Sensex CAS, resulting in illegal gains of approximately Rs 3 crore. Similarly, MSSB is accused of undertaking comparable illegal trades in its proprietary account.
Earlier on the same day, SEBI Chairman Tuhin Kanta Pandey, speaking at FICCI’s Capital Markets Conference, emphasized the regulator’s enhanced capabilities to detect manipulation within the CAS system compared to its predecessor. "We want to make one thing clear, (if people manipulate CAS), then we will take strict action and do it immediately," Pandey declared, highlighting the immediate and severe consequences for those attempting to undermine market integrity. He further added, "In the CAS system, we have more capability to catch manipulation, compared to the old VWAP system."
This action marks the first significant enforcement by SEBI since the CAS system was launched in India on August 3rd. Globally recognized for its role in determining the closing prices of stocks, the CAS system aims to enhance transparency and fairness in market closing mechanisms. However, its introduction has been met with some resistance from small traders, who have voiced concerns about potential manipulation by larger institutional players.
SEBI’s investigation into the August 13th trading activities revealed specific instances of alleged manipulation. In the case of Copthall, SEBI found that a movement in the Sensex from 77,820 points to 78,080 points directly led to an additional payoff on certain call positions and helped avoid payments on specific put positions. For MSSB, the regulator observed that the entity exited certain Sensex put positions while its aggressive sell orders were still active. SEBI concluded that without these actions, these positions would have otherwise expired worthless. The total wrongful gain determined by SEBI stands at Rs 2.96 crore for Copthall and Rs 71.6 lakh for Mansi.
This decisive regulatory intervention underscores SEBI’s commitment to maintaining a fair and transparent market environment, sending a clear message that any attempts at manipulation, especially within newly introduced systems, will be met with immediate and stringent action.
