Mumbai, India, August 19 (ANI): The Securities and Exchange Board of India (SEBI) has passed an ex parte interim order against Copthall Mauritius Investment Limited and Mansi Share and Stock Broking Private Limited over prima facie manipulative trading during the Closing Auction Session (CAS) on the BSE Sensex expiry day on Aug. 13.
According to the order, SEBI observed three sharp movements in the Sensex during the CAS, with the index rising 362.02 points in two seconds, 132.67 points in 12 seconds and 405.08 points in 28 seconds.
SEBI said Copthall accounted for 99.91 percent of the buy-order value during the first spike, 96.09 percent during the second and 85.21 percent during the third period. The regulator observed that Copthall placed aggressive buy orders across Sensex constituents at prices close to 3 percent above the reference price.
The order said Mansi, meanwhile, placed aggressive sell orders across eight Sensex constituents, totaling 12.65 lakh shares, at prices substantially below the reference price. The entire quantity was subsequently canceled within a few seconds.
SEBI said the trading patterns of both entities were examined alongside their positions in Sensex options expiring on the same day. However, the regulator clarified that the evidence did not prima facie indicate that the two entities acted in concert.
The order said the trading pattern of Copthall placing large buy orders at significantly higher prices on three occasions and Mansi placing large sell orders at lower prices and then subsequently canceling them was “prima facie highly unusual” and needed to be examined in relation to their possible positions in futures and options.
Regarding Copthall, SEBI observed that its aggressive buying appeared aimed at influencing the Sensex’s Indicative Equilibrium Price (IEP). The order noted that Copthall subsequently canceled buy orders worth about Rs. 98.12 crore across 30 Sensex constituents.
Regarding Mansi, SEBI said the placement and subsequent cancellation of large sell orders appeared prima facie intended to suppress the IEP and benefit from its outstanding put-option positions.
SEBI said the preliminary findings indicated that the underlying cash-market activity had a direct economic relevance to the entities’ Sensex options positions.
“Each of the notices tried to create a favourable move for themselves in the Sensex constituents to enrich themselves with wrongful gains in their expiry day Sensex Option positions,” the order said.
The regulator calculated wrongful gains of Rs. 2.96 crore for Copthall and Rs. 71.65 lakh for Mansi, taking the total wrongful gains attributed to the two entities to Rs. 3.68 crore. SEBI impounded Rs. 3.68 crore, corresponding to the alleged wrongful gains, and directed the entities to place the amounts into fixed deposits with a lien in SEBI’s favor.
The market regulator said the Sensex closed at 78,080 and observed that Copthall’s trading activity prima facie generated an asymmetric wrongful gain in the derivatives segment.
In its interim directions, SEBI ordered the bank accounts of the two entities to be impounded to the extent of their respective alleged wrongful gains, with Rs. 2.96 crore attributed to Copthall and Rs. 71.65 lakh to Mansi.
The entities were also restrained from accessing the securities markets, subject to the qualifications specified in the order, and prohibited from participating in the equity-segment CAS until further orders.
SEBI said the immediate directions were necessary to protect market integrity and ensure fair price discovery. The order noted that allowing the entities to continue participating in the CAS pending further examination could expose the market to the risk of recurrence of the conduct observed in the case.
The directions will remain in force until further orders, with SEBI continuing its examination of the matter.
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