Why India's market regulator barred a JPMorgan entity from the country's securities market

India’s market regulator, the Securities and Exchange Board of India (SEBI), has banned a JPMorgan Chase & Co.-owned entity, Copthall Mauritius Investment, from the country’s securities market. The regulator claims Copthall’s trading patterns were manipulative, specifically targeting the Closing Auction Session (CAS) to artificially inflate the BSE Sensex’s closing prices. This incident occurred on August 13 when weekly derivatives contracts tied to the index were set to expire.

SEBI alleges that Copthall placed substantial buy orders for all Sensex stocks at prices far above the current market levels, with the intention of lifting the Sensex closing value and increasing the worth of Copthall’s expiring options positions. The regulator estimates the gains from these manipulative trades to be 29.6 million rupees ($309,607). JPMorgan has declined to comment on the matter.

Mansi Share and Stock Broking, another entity associated with JPMorgan, is also accused of engaging in manipulative trades. SEBI claims that Mansi placed significant sell orders in eight Sensex stocks at prices below the prevailing market levels during the CAS, causing the index to drop for about five minutes. After exiting profitable options positions, Mansi later cancelled almost all of the orders.