SEBI Uncovers Manipulative Trades on Sensex Expiry Day, Imposes Fines on Two Entities.
The Securities and Exchange Board of India (Sebi) has instituted an ex-parte interim order against Copthall Mauritius Investment Limited and Mansi Share and Stock Broking Private Limited due to alleged manipulative trading activities during the Closing Auction Session (CAS) on BSE’s Sensex weekly expiry day on August 13, 2026. The regulator has identified a total of Rs 3.67 crore in wrongful gains associated with these transactions, leading to a restriction on both entities from engaging in market activities until the impounded amount is secured in fixed deposits marked in favor of Sebi. The trading activities under scrutiny appear to significantly distort the concept of fair market valuation during a critical pricing mechanism for options settlement and fund calculations.
The preliminary findings indicate that Copthall emerged as the dominant buyer during the CAS, claiming approximately 86.6% of the gross buy value from Sensex constituents. The entity executed a series of rapid and substantial buy orders that contributed to significant spikes in the Sensex index, raising it by over 1,100 points within a brief span. This trading pattern raises concerns about potential market manipulation, particularly as Copthall executed buy orders that were notably above the reference price while other participants placed orders at lower thresholds. Such behavior not only poses a risk to price integrity but also signifies an aggressive strategy targeted at influencing the settlement price, as evidenced by Copthall’s substantial call positions at various strike prices.
Conversely, Mansi utilized a contrasting approach, placing large sell orders at lower prices only to cancel them shortly thereafter, effectively suppressing the index price temporarily. The significant cancellation rate of over 99% on Mansi’s sell orders suggests an intentional strategy to manipulate the sense of market values during a critical time frame, coinciding with its holdings in put options that would have benefitted from a downward movement in the Sensex. The orchestrated dynamics of buy and sell orders raised by these two firms exemplify a concerning trend in the market, where traders might attempt to exploit auction mechanisms for financial gain at the expense of broader market stability.
Sebi’s actions reflect a wider regulatory scrutiny aimed at preserving the integrity of trading mechanisms and protecting investors within the derivatives market. The implications of such manipulative conduct can be profound, undermining fair price discovery processes that are pivotal for options settlement, mutual fund valuations, and overall investor confidence. As the regulatory environment adapts to these challenges, it is critical for investors to remain cognizant of the potential volatility and risks associated with market manipulations, and to consider the overall impacts on market liquidity and pricing accuracy as they strategize their investment decisions moving forward.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)