CAS manipulation will invite stern SEBI action, warns Chairman Tuhin Kanta Pandey

Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Wednesday warned that any attempt to ‘defame’ the newly introduced closing auction session (CAS) through manipulation will be dealt with sternly by the capital markets regulator.

Amid wide-ranging concerns expressed by market participants since CAS was introduced on August 3, Pandey said the regulator's ability to catch any manipulation is higher than under the older volume-weighted average price system (VWAP).

"We can catch hold of manipulation in CAS relatively easily. CAS is for transparency. And if anybody feels that they will manipulate CAS for defaming the new system, they are in danger," Pandey told reporters on the sidelines of an event organised by industry association FICCI in Mumbai.

Tuhin Kanta Pandey said that if there is manipulation in CAS, the market regulator will take strong and immediate action against the same. The Chairman also highlighted that participation in CAS is increasing due to wider adoption.

"I think CAS participation is improving and will further improve. We are looking at the constraints for participation," Pandey said on Wednesday.

What is CAS?

SEBI introduced the Closing Auction Session (CAS) to prevent market manipulation and ensure get more transparency. Under the framework, buy and sell orders are pooled together without immediate execution during a designated time window towards the end of the trade under an auction-style order matching process.

The introduction of the system led to what the SEBI chief had earlier referred to as 'teething troubles'. He had also appealed to participants to undertake more efforts to learn the new framework and also migrate to technology systems that support CAS.

As per SEBI, a CAS-like framework has been adopted by major markets globally for up to two years now. Chairman Pandey has made it clear that regulated entities are responsible for every AI tool they deploy, including aspects such as privacy, security and integrity of investor data.

SEBI fines CAS manipulators

After the SEBI Chairman warned of strict action and consequences for CAS manipulators, the capital markets regulator disclosed that two investment and brokerage firms have allegedly manipulated the system in SENSEX expiry on August 13, 2026.

Copthall Mauritius Investment Limited and Mansi Share and Stock Broking Private Limited were the two entities which have alleged carried out the CAS manipulation on August 13, for which the bank accounts of these firms have been impounded.

The SEBI order now restrains both of these companies from participating in the securities market, participating in the CAS session in the equity segment, changing their holdings, redeeming any securities, disposing of property, among other restrictions.

As per the official filing, the markets regulator recorded some abrupt changes in the movement of the Indicative Equilibrium Price (IEP) during the Closing Auction Session (CAS) on Thursday, August 13.

The regulator mentioned three abrupt spikes between 3:20 and 3:30 pm (IST) on the day, which was the weekly expiry for SENSEX on BSE.

During the first spike, the SENSEX jumped around 360 points, followed by a 132-point spike during the second, and a 405-point spike during the third before the markets closed for the day.

This spike was monitored at a time when the SENSEX was on a downward trajectory. As a result of these alleged manipulation moves, the drawdown was intermittently interrupted by one of the aforementioned price spikes, which caused a temporary deviation from the prevailing downward trend.

A detailed investigation by SEBI is required to be done in this matter due to the violations carried out in the securities market post the latest interim order.