Sebi cracks down on alleged manipulation of new closing auction
India's market regulator Sebi has passed an ex-parte interim order against Copthall Mauritius Investment Limited and Mansi Share and Stock Broking Private Limited for alleged manipulative trades during the closing auction session on BSE's Sensex weekly expiry day. The regulator impounded ₹3.67 crore of alleged wrongful gains and restrained both entities from accessing the securities market until the amount is deposited in fixed deposits marked with a lien in favour of Sebi. In the case of Mansi, the restraint applies to its proprietary trading account.
The case relates to trading during the Closing Auction Session (CAS) on August 13, 2026, a Sensex weekly options expiry day. Sebi said the settlement price of Sensex options was based on the closing price of the index determined during CAS. CAS was introduced by Sebi through a circular dated January 16, 2026, effective from August 3, 2026. Under the framework, normal trading in covered cash market stocks stops at 3:15 pm, a reference price is calculated between 3:15 pm and 3:20 pm, the auction runs from 3:20 pm to 3:30 pm with random closure between 3:28 pm and 3:30 pm, and a single equilibrium price is discovered by 3:35 pm.
Surveillance teams noticed abnormal spikes in the indicative equilibrium price of Sensex during the CAS on August 13. The reference price of Sensex was 77,829.60 at 3:15 pm, while the CAS-discovered closing price was 78,079.96, rounded to 78,080 for calculations. The order detailed three sharp spikes. The first came between 3:20:41 pm and 3:20:43 pm, when Sensex moved from 77,661.40 to 78,023.42, a jump of 362.02 points in two seconds. The second spike came between 3:24:08 pm and 3:24:20 pm, when the index rose 132.67 points. The third spike came between 3:25:49 pm and 3:26:17 pm, when Sensex moved up 405.08 points in 28 seconds.
Copthall was the dominant buyer during the auction, accounting for 86.6% of gross buy value in Sensex constituents. It cancelled 10.38 lakh shares out of 31.66 lakh ordered, or 32.79%. During the first spike, Copthall accounted for ₹66.58 crore of the total ₹66.64 crore buy order value, or 99.91%. The order noted that Copthall's 32 limit buy orders were placed across all Sensex stocks at nearly 3% above the reference price, while other market participants placed orders below 2%. During the second spike, Copthall accounted for ₹126.59 crore of ₹131.74 crore buy order value, or 96.09%. In the third spike, Copthall accounted for ₹98.12 crore, or 85.21% of the total buy order value. Copthall held net buy call positions and net sell put positions at the 77,500, 78,000, and 78,500 strike prices on expiry day.
Mansi placed sell orders worth ₹145.65 crore between 3:21:03 pm and 3:26:00 pm across Sensex stocks and cancelled ₹143.43 crore of those orders between 3:26:02 pm and 3:26:05 pm, a cancellation rate of 99.06% (12.65 lakh out of 12.77 lakh orders). Mansi had open put option positions on expiry day and exited those positions during the period when its sell orders were allegedly suppressing the index price.
Sebi said it was not alleging at this stage that Copthall and Mansi acted in concert; the two entities adopted opposite but aggressive price-impacting strategies during the same CAS session. Sebi calculated wrongful gains of ₹2.96 crore for Copthall and ₹71.64 lakh for Mansi, totalling ₹3.67 crore. The regulator said the CAS-discovered price is used for options settlement, mutual fund net asset value calculation, and other market functions, and that manipulation could damage fair price discovery and harm investors.
JPMorgan unit expected to argue technical breach
Copthall Mauritius Investment Ltd, which operates as a foreign portfolio investor (FPI) for JPMorgan's global clients, is expected to argue that the alleged violations were technical in nature rather than an attempt to manipulate the market, according to a Bloomberg report cited by multiple outlets. The report, citing people familiar with the matter, said Copthall plans to seek clarification from Sebi but is unlikely to appeal the order for now. This is seen as an effort to take a conciliatory approach towards Indian regulators.
Sebi board member Kamlesh Chandra Varshney, who passed the order, said the trading restrictions would remain until the alleged unlawful gains are returned. He also directed a detailed examination of the trades, saying it should be completed expeditiously and independently of the findings in the interim order. Both entities have 21 days to respond to the allegations and can seek a personal hearing.
JPMorgan is considering an internal assessment to identify any potential compliance gaps, people familiar with the matter said. Copthall is separate from JPMorgan India Pvt, which is registered with Sebi as a stock broker and merchant banker, so the order against the Mauritius-based entity does not directly restrict JPMorgan India's operations. A spokesperson for JPMorgan declined to comment.
A broader regulatory context
The case comes amid increased regulatory scrutiny of foreign institutions in India's equity market, with Sebi described as having become increasingly proactive in reforming the market and not hesitating to penalize foreign firms in its $5.1 trillion stock market. According to Business Line, which cited anonymous people familiar, Sebi's finding against the JPMorgan unit represents one of the first major actions over market manipulation involving a global firm since the regulator accused Jane Street Group of similar misconduct last year. Jane Street denied the charges and is pursuing an appeal in an Indian appellate court seeking access to additional documents.
The Hindu Business Line noted that Sebi published the interim order on last Wednesday, which would be August 20, 2026, based on the publication date of the article.
This article was prepared based on the reporting of this story by four sources: Business Today, *The Economic Times, Free Press Journal, and The Hindu Business Line. Their coverage has been combined to present a comprehensive account of the regulator's action and the expected response.*