SEBI Bars 2 Firms Over ₹2.96 Crore SENSEX Manipulation on August 13

SEBI issued its first interim order on alleged manipulation in the Closing Auction Session, linked to SENSEX weekly derivatives expiry trades on August 13. The regulator named Copthall Mauritius Investment Ltd and Mansi Share and Stock Broking Pvt Ltd, alleging the use of aggressive cash-market orders to influence the index’s final closing level and benefit their options positions.

What Did SEBI Allege Against Copthall Mauritius and Mansi?

SEBI’s order said there was no prima facie evidence that the two entities acted together. The regulator has treated the alleged conduct as separate actions rather than a coordinated scheme.

What Is the Closing Auction Session and Why Does It Matter on Expiry Day?

The Closing Auction Session was introduced from August 3 to determine closing prices after normal cash-market trading ends at 3:15 pm. The framework works in two stages:

• A reference price is established between 3:15 pm and 3:20 pm
• An auction runs from 3:20 pm to 3:30 pm to determine the final closing level

On expiry days, movements in index constituents during this window directly affect the final index level and option payoffs. A small change in the closing value can shift the payoff profile of options positions around nearby strike prices, making the auction window particularly sensitive.

What Happened to SENSEX During the August 13 Auction

The SENSEX moved from a CAS reference price of 77,829.60 to close at 78,080 on August 13. SEBI identified three sharp upward moves and one broader downward move during the auction window.

How SEBI Connected Buy Orders to Three SENSEX Spikes

SEBI said Copthall placed buy orders at 3% above the reference price, the maximum permissible limit, across SENSEX constituents. The regulator’s findings on Copthall’s share of total buy-order value:

• First spike: 99.91% of total buy-order value, or ₹66.57 crore
• Second spike: 96.09% of ₹126.59 crore in buy orders
• Third spike: ₹98.12 crore of orders placed

SEBI noted that Copthall cancelled its latest buy orders at 3:26:21 pm, which the regulator said indicated the orders were not placed with a genuine intention to acquire shares.

How SEBI Described Mansi’s Sell Orders

SEBI alleged Mansi pushed the index lower by placing large sell orders below the reference price. The firm placed orders for 12.65 lakh shares across eight SENSEX constituents, valued at ₹143.43 crore.

The regulator said 99.06% of these sell orders were cancelled within seconds after the downward pressure had been created. SEBI linked these trades to Mansi’s net buy Put positions at the 77,800, 77,900 and 78,000 strikes.

What Are the Interim Restrictions SEBI Has Placed on Both Entities?

SEBI issued interim directions against both entities:

As interim directions, both entities named as noticees will have an opportunity to respond through the regulatory process.

Final Outlook

Source: NDTV