A JPMorgan Chase & Co unit facing allegations of market manipulation from market regulator SEBI is likely to contend that the issue was technical in nature rather than manipulative, according to people familiar with the matter. The subsidiary, called Copthall Mauritius Investment Ltd, plans to seek clarifications but is unlikely to appeal the order for now, suggesting an effort to take a more conciliatory approach towards Indian regulators. This approach represents a significant shift in how global firms are responding to regulatory enforcement in India's $5.1 trillion stock market, where regulators have become increasingly proactive in reforming the market and haven't hesitated in penalizing foreign firms. JPMorgan is also weighing launching an internal assessment to identify gaps in compliance, as reported by CNBC TV18.
The Securities and Exchange Board of India (SEBI) has taken decisive action against two entities over alleged manipulation during the Closing Auction Session (CAS) of the Sensex on August 13, 2026. According to The Times of India, this marks the first time SEBI has launched formal proceedings against any entity trading in the auction session, representing a significant escalation in regulatory enforcement. The regulator issued an ex-parte interim order within six days of the alleged manipulation, marking one of the fastest crackdowns in market history. SEBI restrained Copthall Mauritius Investment and Mansi Share and Stock Broking from accessing the securities market and participating in CAS for allegedly manipulative trades during the CAS period. SEBI chairman Tuhin Kanta Pandey had warned market players earlier at the FICCI Capital Markets Conference that the regulator would take strict action against any manipulation in CAS, stating that "If people do manipulation in CAS then we will take strict action and (will) do it immediately."
SEBI's surveillance system detected three sharp movements in the Sensex during CAS on August 13, with movements of 362.02 points, 132.67 points and 405.08 points respectively, recorded within 2 to 28 seconds. As reported by The Times of India, during the closing auction on August 13, the index moved from 77,661 to 78,023 (362 points), 77,708 to 77,841 (133 points) and 77,788 to 78,193 (405 points), with all three sharp moves unfolding within six minutes. In the case of Copthall, the entity placed 32 buy orders for 3.17 million shares worth ₹66.57 crore, accounting for 99.91% of buy-order value during the first spike, 96.09% during the second, and 85.21% during another relevant period. The entity subsequently cancelled buy orders worth ₹1.04 crore across all Sensex constituents, with orders placed near the upper permissible CAS limit of 3% above the reference price. SEBI has directed the impounding of wrongful gains, with ₹2.9 crore for Copthall and ₹71.65 lakh for Mansi, resulting in a combined amount of approximately ₹3.6 crore. The settlement price of Sensex options was based on the closing price determined during CAS, with the reference price at ₹77,829.60 at 3:15 pm and the CAS-discovered closing price at ₹78,080.
According to CNBC TV18, SEBI has banned JPMorgan's Mauritius-based unit Copthall Mauritius Investment Ltd. from the capital market over allegations of manipulating India's newly introduced auction-based system for share price discovery. The regulator impounded ₹37 crore ($309,607), which it described as wrongful gains made by Copthall and local firm Mansi Share and Stock Broking Ltd., as reported in an initial order published late Wednesday. SEBI board member Kamlesh Varshney alleged that Copthall and Mansi undertook manipulative trades during the closing auction window on August 13 to influence the indicative equilibrium price of the BSE Sensex Index in a way that would benefit their options positions on the benchmark. The order by SEBI board member Kamlesh Varshney alleged that Copthall and Mansi undertook manipulative trades during the closing auction window on August 13 to influence the indicative equilibrium price of the BSE Sensex Index in a way that would benefit their options positions on the benchmark. The firms placed outsized orders in Sensex stocks during the closing auction, accounting for more than 90% of all orders in some securities identified by the regulator, as reported by The Hindu BusinessLine. They subsequently cancelled large portions of the orders, influencing indicative closing prices without executing the trades in full, according to SEBI. "These large buy orders and sell orders, which were placed and then cancelled, allowed them to avoid losses or wrongfully profit themselves from positions in derivatives trades that otherwise would have expired worthless," Varshney wrote in the order. A spokesperson for JPMorgan declined to comment, while Mansi didn't immediately respond to an email request outside of regular business hours. Business Standard reports that SEBI's findings show Copthall was behind 99% of the buy-order value during the spikes, with the regulator alleging that the firm placed ₹98 crore in coordinated purchases across all Sensex constituents at the same time, indicating an "intent to manipulate" the closing price by increasing the indicative equilibrium price (IEP) of Sensex in CAS.
SEBI has implemented significant enhancements to the Closing Auction Session mechanism, with chairman Tuhin Kanta Pandey stating that the new CAS system provides "more capability to catch manipulation compared to the old VWAP system." As reported by The Times of India, the CAS system, made effective from August 3, is a 20-minute trading window from 3:15 pm to 3:35 pm used to determine the closing price of stocks through an auction mechanism. The mechanism is aimed at improving price discovery and bringing India's market closer to practices followed in other major markets. Under the system, buy and sell orders are pooled during a dedicated end-of-day window and matched at an equilibrium price that allows the maximum volume of shares to trade. The Closing Auction Session begins after normal cash-market trading ends at 3:15 pm, with a reference price established between 3:15 pm and 3:20 pm, followed by an auction from 3:20 pm to 3:30 pm to determine closing prices. Movements in constituent stocks during the auction can therefore affect the index's final level and expiry-day option payoffs. The regulator has prohibited both entities from participating in CAS in the equity segment, directly or indirectly, from placing, modifying or cancelling orders during the CAS until further orders. For Mansi, the ban specifically applies to its proprietary trading account. In the 46-page order, SEBI has outlined the modus operandi by the two entities, involving use of large and aggressive buy and sell orders in Sensex constituents to influence the indicative equilibrium price or closing price to enrich themselves. The regulator emphasized that such manipulative practices have huge ramifications on participants who trade in F&O segments, including retail investors, and noted that immediate interim directions are necessitated in the interest of maintaining market integrity and preventing further misuse of the CAS mechanism by entities adopting manipulative practices. SEBI has not alleged that the two entities acted together, but each appeared to have tried to create a favourable move in the Sensex for its own expiry-day options positions, with Copthall standing to benefit from a higher Sensex while Mansi had put-option positions that benefited from a lower index. The order said that with the introduction of CAS, volatility and manipulation is expected to reduce as the system becomes more efficient and transparent, with the design of CAS such that it provides SEBI with greater ability to identify manipulation as compared to earlier VWAP system.
The swift action against JPMorgan and Mansi represents a departure from SEBI's historical approach to market manipulation cases, with former board member Ashwani Bhatia calling it "unprecedented" as reported by Business Standard. The crackdown underscores the regulator's determination to ensure the success of the Closing Auction System, one of the biggest reforms to India's stock market in recent years and part of an effort to align it with global standards. The system's rollout earlier this month has faced pushback from traders following unexplained spikes in stock benchmarks during closing sessions. As noted by Business Standard, what helped SEBI swiftly uncover the alleged wrongdoing was the design of the new system, which makes manipulation easier to detect. "At a practical level, the CAS is a single window under a spotlight, making it easier to surveil - especially for things like order spoofing - than under the previous regime," said Ananth Narayan, a former board member at SEBI. The trading ban on Copthall and Mansi Share will be lifted once the entities pay back nearly ₹3.7 crore ($386,000) in combined unlawful gains to the regulator, as reported by The Hindu BusinessLine. Copthall is separate from JPMorgan India Pvt., which is registered with SEBI as a stock broker and merchant banker, meaning the order against the Mauritian entity does not directly impact JPMorgan's activities in India which are mostly conducted through its local unit. The unit, which acts as a conduit for investments by JPMorgan's global clients in India, is registered as a foreign portfolio investor with SEBI and has 21 days to respond to the allegations, including by seeking a personal hearing. SEBI's finding against the JPMorgan unit represents one of the first major actions over market manipulation involving a global firm since the regulator accused the Wall Street trading giant Jane Street Group of similar misconduct last year, with the firm denying the charges and pursuing an appeal in an Indian appellate court seeking access to additional documents.
