India Lifts JPMorgan Unit Trading Ban After SEBI Order

The Indian authorities have lifted the trading ban on Copthall Mauritius Investment Ltd, which is part of JP Morgan Chase & Co, after the firm deposited Rs. 2.96 crore in accordance with an interim order issued by the Securities and Exchange Board of India (SEBI). The SEBI claimed that Copthall and Mansi Share and Stock Broking conducted manipulative trading activity in relation to the closing auction of BSE. Although the two firms are free to trade in the Indian stock market, the ongoing investigation at SEBI continues.

Why was the JPMorgan Subsidiary Banned?

An interim order issued by the SEBI claimed that Copthall Mauritius Investment and Mansi Share and Stock Broking conducted manipulative trading activity on August 13.

It appears that the motive for conducting the manipulative trading was to affect the indicative equilibrium price of the BSE Sensex so as to benefit from benchmark-based options.

The regulator ordered the two entities to pay off the unlawful gains.

Ban Lifted Following ₹2.96 Crore Deposit

Copthall deposited roughly ₹29.6 million (₹2.96 crore) in a bank account last month in compliance with the regulator’s demand. Mansi Share has also deposited its alleged gains, sources said.

With this, SEBI has lifted the restrictions on both the companies and enabled them to trade in India’s stock market.

But this lifting of ban does not indicate that the allegations against them have been brushed aside. The regulator will pursue its investigation.

What Happens Next in the SEBI Case?

It is expected that after analyzing the formal replies submitted by Copthall and Mansi Share, SEBI will issue a confirming order.

Both the firms were given 21 days to reply and will also be given an opportunity of personal hearing.

So the ultimate decision will depend on SEBI’s further analysis of the case.

Market Manipulation Case Context

The case arises at a time when there have been reforms in India’s method for setting closing prices of over 200 securities. The introduction of the auction process has apparently brought volatility in related derivative products.

The SEBI has also said that it intends to put out a discussion paper on the issue of determining settlement prices of futures and option contracts considering the newly introduced system.

Is Copthall Equivalent to JPMorgan India?

No. Copthall Mauritius Investment Ltd is a Mauritius registered company and not J.P. Morgan India Pvt.

J.P. Morgan India has SEBI registration as a stock broker and merchant banker. Thus, the regulatory ban on Copthall does not automatically affect the activities of JPMorgan’s India arm.

Copthall has been a significant investor in Indian stocks in the past. Its investments in Indian stocks had once been worth more than ₹5,500 crore but had come down to less than ₹38 crore till June 30.