Sebi Cracks Down on JPMorgan Unit, Local Brokerage Firm for CAS Manipulation
The Securities and Exchange Board of India (Sebi) has taken swift action against JPMorgan Chase & Co.'s Mauritian unit, Copthall Mauritius Investment Ltd., and local brokerage firm Mansi Share and Stock Broking Ltd. for allegedly manipulating the country's new Closing Auction System.
The regulator issued an interim order within six days of the alleged manipulative trading on August 13, a departure from its past practices which often took years to issue such rulings. According to Sebi officials, the swift action was necessary to ensure the success of the CAS, one of the biggest reforms to India's stock market in recent years.
Sebi Chairman Tuhin Kanta Pandey earlier this week stated that the new system is here to stay, even as the regulator remains open to tweaks. The regulator has also made it clear that the CAS will be monitored closely, and any attempts at manipulation will be dealt with swiftly.
Copthall and Mansi Share have been banned from the capital market until they pay back nearly 37 million rupees ($386,000) in combined unlawful gains to Sebi. The regulator alleges that the entities executed manipulative trades during the closing auction window to influence the indicative equilibrium price of the BSE Sensex Index.
Sebi's swift action has been seen as a warning to traders who might attempt to manipulate the CAS, which was rolled out earlier this month. The system's design makes manipulation easier to detect, allowing regulators to focus on a discrete auction window and examine orders as they are entered, modified, and canceled.