JPMorgan entity among two firms barred in India over alleged closing auction manipulation

Mumbai: India's securities regulator, SEBI, has banned two firms - Copthall Mauritius Investment and Mansi Share and Stock Broking - from the market for allegedly manipulating trades on a new closing-price mechanism. The ban came on August 14, 2021, after an investigation into alleged violations that occurred on August 13, 2021, when weekly derivatives contracts linked to the BSE Sensex expired.

The regulator accused Copthall, a Mauritius-based entity owned by JPMorgan Chase, of making aggressive buy orders during the closing auction session (CAS), while Mansi Share was accused of making large sell orders. These actions, SEBI claimed, distorted the prices of Sensex constituent stocks in the newly introduced CAS mechanism. The mechanism, launched on August 3, 2021, is a 20-minute auction window that starts at 3:15 p.m. IST after regular trading ends, with the aim of improving price discovery.

SEBI estimated wrongful gains of around 29.6 million rupees for Copthall and 7.2 million rupees for Mansi. Mansi Share later cancelled much of its sell-side activity. SEBI emphasized that any manipulation or unfair practices in the CAS mechanism can undermine its integrity and disrupt the orderly functioning of securities markets.

The regulator stressed that the investigation found no evidence that the two firms acted together. JPMorgan declined to comment on the matter, while Mansi Share was not immediately available for comment. As a result of the ban, a total of 36.8 million rupees (US$384,324) has been impounded from the two firms.