SEBI Cracks Down on Closing Auction Manipulation, Seizes ₹3.68 Cr

India’s market regulator, Sebi, has issued a stern warning against manipulation of its newly introduced Closing Auction Session (CAS), following action taken against two entities.

Sebi Targets Closing Auction Manipulation

Sebi chairman Tuhin Kanta Pandey stated that attempts to “defame” the CAS system would face immediate and stern action. The regulator has already acted against two entities for alleged Sensex manipulation during a CAS session.

• The manipulation occurred on August 13, 2026.
• Sebi impounded ₹3.68 crore in wrongful gains from the entities.

Enhanced Detection and Participant Growth

Pandey emphasized that Sebi possesses a higher ability to detect manipulation within CAS compared to the previous Volume Weighted Average Price (VWAP) system. This enhanced oversight aims to safeguard market integrity during critical closing periods.

The CAS framework has also seen increasing participation from various market players, underscoring its importance in market operations.

• Participants include mutual funds.
• Proprietary traders are also noted for their involvement.

Broader Regulatory Frameworks Under Review

Beyond the closing auction, Sebi is actively reviewing other critical market regulations. These reviews aim to refine existing rules and address current market challenges.

Specifically, the regulator is examining rules governing initial public offerings (IPOs) for smaller companies. Delisting regulations are also under scrutiny to address issues like market making costs.

Stock brokers have also received specific guidance regarding order placement during a crucial transition period, ensuring smoother operations ahead of the CAS.

• Investors should be allowed to place orders during the five-minute transition period.
• This period runs between 3:15 pm and 3:20 pm, just before CAS.
• System changes to accommodate this are anticipated by early September.

These actions and reviews highlight Sebi’s ongoing commitment to strengthening market surveillance and ensuring fair trading practices across various segments of the Indian market.