The Securities and Exchange Board of India (SEBI) has moved swiftly against alleged manipulation in the newly introduced Closing Auction Session (CAS), barring Copthall Mauritius Investment and Mansi Share & Stock Broking from accessing the securities market.
The action relates to trades allegedly carried out during the CAS on the Sensex expiry at BSE on August 13. SEBI has also ordered the impounding of alleged wrongful gains totalling Rs 3.67 crore.
Of this, Rs 2.96 crore relates to Copthall Mauritius Investment, while Rs 71.64 lakh involves Mansi Share & Stock Broking.
SEBI Restricts CAS Trading
The regulator has prohibited both entities from participating in the equity segment’s CAS, either directly or indirectly, until further orders. They have also been barred from placing, modifying or cancelling orders during the auction session.
For Mansi Share & Stock Broking, the restriction applies specifically to its proprietary trading account.
SEBI has additionally directed that the entities’ bank accounts be frozen against debits without prior permission from the regulator. The interim action, according to the order, is intended to protect market integrity, fair price discovery and investors while preventing any further misuse of the CAS mechanism.
The regulator noted that the entities had also built outstanding positions in weekly Sensex options due for expiry on August 20, prompting immediate intervention. A detailed investigation into the alleged trading activity will follow.
Tuhin Kanta Pandey Warns Against CAS Manipulation
The action came just hours after SEBI Chairman Tuhin Kanta Pandey warned that the regulator would take immediate and strict action against attempts to manipulate CAS.
Pandey said the new auction mechanism provides SEBI with greater ability to detect manipulation compared with the earlier volume-weighted average price (VWAP) method.
Introduced on August 3, CAS operates for 20 minutes between 3:15 pm and 3:35 pm and uses an auction process to determine stock closing prices. It currently applies to stocks in the futures and options segment.
SEBI said the mechanism is expected to improve transparency and reduce opportunities for manipulation. The regulator also warned that such practices can have significant consequences for F&O market participants, including retail investors.
