MUMBAI: Within hours of Sebi chairman Tuhin Kanta Pandey warning market players about strict regulatory actions against any manipulation with the recently introduced Closing Auction Session (CAS), the regulator late Wednesday banned Copthall Mauritius Investments, a foreign fund from the market till further orders and impounded nearly Rs 3 crore.Sebi alleged that Copthall Mauritius had, on Aug 13, used manipulative trades in sensex CAS to illegally gain about Rs 3 crore. Sebi also banned Mansi Share & Stock Broking (MSSB) from trading in its proprietary account for similar illegal trades and ordered impounding Rs 71.6 lakh. Both the entities have been directed to appear before Sebi’s investigating officials in the case within 21 days.
Earlier in the day, the Sebi chief said that the regulator was now more capable of detecting manipulations in CAS system than in the earlier system. Pandey warned of strict action against any such manipulation in the system.“We want to make one thing clear, (if people manipulate CAS), then we will take strict action and do it immediately,” Pandey told reporters on the sidelines of FICCI’s Capital Markets Conference in the city. “In the CAS system, we have more capability to catch manipulation, compared to the old VWAP system.”Meanwhile, Sebi’s action against the two entities was the first since CAS was introduced. The new system, globally recognised for calculating the closing price of stocks, was launched in India on Aug 3.Since then, there has been some resistance from small traders who raised concerns about manipulation of the system by large institutions.In this case, on Aug 13, Sebi examined trading activities in sensex constituent stocks during CAS against the concurrent expiry-day derivatives positions of the respective entities, the order said. “In case of Copthall, it was seen that a movement in sensex from 77,820 points to 78,080 points resulted in additional payoff on certain call positions and avoidance of payment on certain put positions.In the case of MSSB, the entity exited certain sensex put positions while its aggressive sell orders were outstanding.” Sebi found that these positions would otherwise have expired worthless. “The total wrongful gain determined in the matter is Rs 2.96 crore for Copthall and Rs 71.6 lakh for Mansi.”
