JPMorgan entity barred in India for auction manipulation

India’s Securities and Exchange Board (SEBI) has barred a JPMorgan-linked entity and a domestic brokerage from participating in Indian markets, alleging the two firms manipulated the country’s brand-new closing auction mechanism just ten days after it launched. The interim order, issued on August 19, targets Copthall Mauritius Investment, which is associated with JPMorgan, and Mansi Share and Stock Broking. SEBI says the firms distorted prices during the Closing Auction Session (CAS) on August 13, the same day BSE Sensex weekly derivatives contracts expired. The regulator has impounded a total of Rs 3.68 crore, roughly $384,324, in alleged wrongful gains. What happened during the auction The CAS is a relatively new feature of India’s equity markets. It launched on August 3 as a replacement for the Volume-Weighted Average Price (VWAP) method that had previously been used to determine closing prices. The idea behind the 20-minute auction window was straightforward: improve price discovery and make it harder for traders to game closing prices. According to SEBI’s findings, Copthall placed aggressive buy orders during the CAS on August 13 while Mansi flooded the session with large sell...