India's market regulator has taken interim enforcement action against two firms for their trading activity during a recently introduced closing-price mechanism, saying the trades distorted final official prices.
The Securities and Exchange Board of India said Copthall Mauritius Investment and Mansi Share and Stock Broking were banned from the market in an order issued on Wednesday. SEBI's notice identifies August 13 as the date of the alleged rule breach, corresponding with the expiry of weekly derivatives contracts tied to the BSE Sensex.
According to the regulator, the conduct occurred within the exchange's new closing auction session, a trading window used to set end-of-day official prices. SEBI's interim findings state Copthall entered aggressive buy orders while Mansi placed large sell orders during that session. The regulator concluded that the combined activity altered the prices of stocks that make up the Sensex index.
SEBI's interim order also reports that Mansi subsequently cancelled a significant portion of its sell-side orders. The regulator quantified estimated ill-gotten gains at about 29.6 million rupees for Copthall and 7.2 million rupees for Mansi. In addition, SEBI directed the seizure of 36.8 million rupees from the two firms as part of the interim measures.
The action is provisional and remains in place while SEBI continues its probe. The interim nature of the order means the measures and the seized funds are subject to change pending the outcome of further investigation and any additional enforcement proceedings SEBI may pursue.
Market participants and observers have been notified through the regulator's order, which focuses strictly on the trading behaviour in the closing auction and the resulting price effects on Sensex constituents. Beyond the figures and the procedural details provided in the interim order, SEBI has not released further findings or a final determination at this stage.