SEBI Passes Interim Order Against Copthall Mauritius and Mansi Share Over CAS Manipulation

The Securities and Exchange Board of India (SEBI) has taken its first enforcement action under the newly introduced Closing Auction System (CAS), passing an ex-parte interim order against Copthall Mauritius Investment Ltd, an affiliate of JP Morgan Chase, and Mansi Share and Stock Broking Ltd. The regulator alleges that aggressive orders in Sensex constituents were used to influence the index's closing level to generate gains in expiry-day options.

SEBI introduced the CAS mechanism in a phased manner starting August 3, 2026, to make the stock closing price mechanism more transparent and align it with global practices. Under this framework, normal trading halts at 3:15 pm, a reference price is calculated by 3:20 pm, and an auction runs until a random closure between 3:28 pm and 3:30 pm. Prices of Sensex constituents are allowed to move up to 3 per cent from the reference price during this window before a single equilibrium price is discovered by 3:35 pm.

The alleged manipulation took place on August 13, the weekly expiry day for Sensex derivatives, when the mechanism was barely two weeks old. According to SEBI's surveillance, the Sensex reference price was 77,829.60, but the index eventually closed at 78,080 after experiencing three sharp, short-lived spikes during the auction window. Copthall was identified as the dominant buyer during these upward movements, placing large limit-buy orders at 3 per cent above the reference price across all Sensex constituents. SEBI noted that Copthall held outstanding long call and short put positions in Sensex options, which benefited from the pushed-up index.

Meanwhile, Mansi Share and Stock Broking followed a different approach. SEBI stated that the stock broker's orders suppressed the Sensex Indicative Equilibrium Price (IEP) for around four to five minutes through aggressive selling in eight constituents. After squaring off its open Sensex put options to its advantage, the broker cancelled the sell orders. SEBI noted that while both entities influenced the IEP to benefit their respective derivatives positions, the evidence does not prima facie indicate that they acted in concert.

In response to the violations, SEBI has impounded prima facie wrongful gains of ₹2.96 crore for Copthall and ₹71.65 lakh for Mansi, totaling ₹3.68 crore, to be placed in fixed deposits with a lien in SEBI's favour. Both entities have been prohibited from participating in the CAS in the equity segment and restrained from accessing the securities market more broadly. SEBI stated that immediate directions were necessary because both entities had already built outstanding positions in the subsequent weekly Sensex options contract expiring on August 20.

The interim order was signed by whole-time member Kamlesh Chandra Varshney. Both Copthall and Mansi Share and Stock Broking have 21 days to file replies and objections and may seek a personal hearing. SEBI Chairperson Tuhin Kanta Pandey had earlier warned that any attempts to manipulate the CAS framework would be dealt with sternly, emphasizing that the regulator's ability to catch manipulation under CAS is higher than the older volume-weighted average price system.

"This enforcement action highlights the critical importance of regulatory compliance and surveillance in newly introduced market mechanisms. As SEBI ramps up its oversight on derivative trading and price discovery frameworks like the Closing Auction System, institutional participants must exercise rigorous internal controls. Regulatory vigilance on expiry-day positioning ensures market integrity, signaling that aggressive manipulation of closing prices will face swift and stringent intervention." — Dr. Shishir Gupta, Founder & CEO, StartupLanes