Sebi Bars Two Entities for Manipulating Sensex Closing Auction

India’s Securities and Exchange Board (Sebi) has barred two trading entities, Copthall and Mansi, for allegedly manipulating the Closing Auction Session (CAS) of the benchmark Sensex. The market regulator detected sharp and unusual index movements on August 13 that were designed to influence the closing value and generate wrongful gains from expiry-day options positions.

Surveillance systems recorded three abrupt Sensex movements of 362.02 points, 132.67 points, and 405.08 points within spans of just 2 to 28 seconds. Order logs revealed a heavy concentration of activity by Copthall during these windows. The entity accounted for 99.91 percent and 96.09 percent of the buy-order value during the initial two-second spike, and 85.21 percent during another relevant period.

Mansi allegedly executed an opposite strategy to artificially benefit its outstanding put-option positions. The entity placed large sell orders across eight Sensex constituents at prices significantly below the reference price to exert downward pressure on the Indicative Equilibrium Price. The entire sell block was subsequently cancelled only after those positions were squared off.

The regulator concluded that these orders were not bona fide, but rather intended to artificially suppress or inflate the index for derivative profit. Sebi estimated Copthall’s prima facie wrongful gains at 2.9 crore rupees. Mansi’s wrongful gains were calculated at 71.6 lakh rupees, bringing the combined preliminary total for both entities to 3.6 crore rupees.

In an ex-parte interim order, Sebi whole time member Kamlesh Varshney emphasized the broader market damage caused by such tactics. He stated that this behavior "undermines the functioning of the securities markets" and is "unfair to other investors who invest in mutual funds and take positions in options based on trust."

Despite the seemingly complementary nature of the manipulative trading patterns, Sebi explicitly noted that the examination and evidence do not prima facie indicate that the entities acted in concert. This enforcement action underscores the regulator’s intensified focus on protecting the price discovery mechanisms that are critical to both institutional and retail market participants.