India’s securities regulator has barred two firms from the market over allegations that they manipulated trades through the country’s newly introduced closing-price mechanism. This case highlights growing concerns over India trade manipulation in financial markets.
According to Reuters, the Securities and Exchange Board of India took action against Copthall Mauritius Investment and Mansi Share and Stock Broking following trading activity recorded on August 13.
Firms accused of exploiting new system
SEBI said the alleged violations occurred as weekly derivatives contracts linked to the Bombay Stock Exchange expired.
The investigation centres on the recently introduced closing-auction mechanism used to determine closing prices.
The regulator alleged that the two firms exploited the mechanism to manipulate trading during the session.
SEBI orders funds impounded
In an interim order, the regulator barred both companies from participating in the securities market.
SEBI also ordered the impounding of a combined 36.8 million rupees from the two firms.
The amount is equivalent to approximately $384,000.
New closing system faces early test
The enforcement action comes shortly after SEBI introduced the new closing-auction system as part of wider reforms to India’s financial markets.
SEBI chairman Tuhin Kanta Pandey had previously said the mechanism would make suspicious activity easier for regulators to detect.
He also warned that the regulator would take strict action whenever evidence of manipulation was uncovered.
The latest case is among the first major enforcement actions linked to the new system and could provide an early test of its effectiveness in improving transparency in India’s capital markets.
