India’s markets regulator SEBI has taken enforcement action against two trading firms accused of orchestrating price swings to profit from derivatives, highlighting challenges in the phased rollout of the new closing auction mechanism.
India’s markets regulator has moved against two trading firms after finding what it described as coordinated attempts to distort the benchmark close during the first days of the new closing auction session, a mechanism SEBI introduced in August to set a single end-of-day price for stocks with derivatives contracts. According to SEBI’s order, Copthall Mauritius Investment and Mansi Share and Stock Broking were barred from the securities market and told to keep out of the closing auction process, while alleged wrongful gains totalling ₹3.67 crore were ordered to be impounded.
The case centres on August 13, when BSE’s Sensex weekly options expired and the closing auction was used to determine the final index level. SEBI said the index posted three sharp intraday spikes within minutes of one another, with the most dramatic move lifting the benchmark by more than 400 points in less than half a minute. The regulator’s surveillance teams said the swings were inconsistent with ordinary trading patterns and warranted enforcement action.
In its findings, SEBI said Copthall Mauritius placed aggressive buy orders across all 30 Sensex constituents at prices well above the reference level, helping push the index higher before cancelling a large portion of those orders. The regulator said the firm held sizeable long call and short put positions, meaning it stood to benefit if the index closed stronger. SEBI estimated the wrongful gain from that strategy at ₹2.96 crore.
Mansi Share and Stock Broking, meanwhile, was accused of using the opposite approach. SEBI said the firm entered heavy sell orders in eight key Sensex stocks at prices below the reference level, creating downward pressure for several minutes before withdrawing the orders. That, the regulator said, helped the firm profit from put options it had already written. SEBI put the alleged illegal gain at ₹71.64 lakh.
The action comes against the backdrop of a phased roll-out of the closing auction session, which SEBI announced in January and which took effect on August 3, 2026, for stocks with derivatives contracts. Only days before the enforcement order, SEBI chairman Tuhin Kanta Pandey had said the regulator had found no evidence of manipulation in the new system and described it as an important market-structure reform aimed at improving the reliability of closing prices for index funds, mutual fund net asset value calculations and derivatives settlement.
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