India's markets regulator, the Securities and Exchange Board of India (SEBI), has recently taken significant enforcement actions against international financial firms, indicating a tougher stance on market manipulation. In a notable move, SEBI banned Copthall Mauritius Investment Ltd., a Mauritius-based unit of JPMorgan Chase & Co., from its capital markets. This action marks the first enforcement related to alleged manipulation of India's new closing auction for stock prices.
SEBI impounded 37 million rupees ($386,000) from Copthall and local firm Mansi Share and Stock Broking Ltd., citing these as "wrongful gains." The order alleged that both entities engaged in manipulative trades during the closing auction window on August 13 to influence the indicative equilibrium price of the BSE Sensex Index, which benefited their options positions on the benchmark. Specifically, Copthall placed large buy orders totaling 3.17 million shares, nearly 12 times the next biggest player, and later canceled almost a third of them. Mansi Share placed sell orders for 1.28 million shares, canceling nearly all.
This action follows SEBI's previous allegations against US-based trading firm Jane Street Group for similar misconduct last year. Jane Street, which denies the charges, is currently appealing the decision in an Indian court, seeking access to additional documents. An Indian court recently ordered SEBI to respond within three weeks to Jane Street's plea for more documents and effectively paused any personal hearings with the firm until November 18, delaying a confirmatory order from the regulator. Jane Street had previously been suspended from trading in July 2025 over allegations of manipulating indexes, with SEBI claiming $567 million of its $4.23 billion profits from Indian derivatives between January 2023 and March 2025 were "unlawful gains."
These enforcement actions highlight the challenges SEBI faces with its new auction-based system, introduced for over 200 stocks in India's $5.1 trillion stock market. Intended to align India with global standards and reduce manipulation, the system has drawn criticism from traders due to unexplained spikes in stock benchmarks during closing sessions and a 40% reduction in average turnover during the auction window compared to the previous regime. Analysts like Amit Kumar Gupta of Fintrekk Capital view SEBI's swift decisions as a sign of close monitoring, suggesting that such manipulative practices may be less likely in the future.
