India lifts ban on JPMorgan unit, broker in market-manipulation case, sources say

India's markets regulator has lifted a trading ban on a JPMorgan Chase & Co unit and Mansi Share and Stock Broking over alleged manipulation of the closing auction session after the firms deposited a combined 36.8 million rupees ($386,941), two sources familiar with the matter told Reuters on Wednesday.

The Securities and Exchange Board of India (SEBI) last month banned the two firms from the market, alleging they manipulated trades in a newly launched closing-auction mechanism used to determine the final official price of securities at the end of a trading day.

Launched on August 3, the closing auction is a roughly 20-minute auction during which buy and sell orders are matched to determine a stock's official closing price.

While similar systems exist in other markets, the mechanism's first month in India saw sharp swings in derivatives prices, divergences between prices on the country's two exchanges and signs that it was prone to manipulation, prompting the regulator to start a review last week.

Last month, the regulator alleged that aggressive buy orders placed by Copthall and large sell orders by Mansi during the auction distorted the prices of stocks in the Sensex index.

Copthall Mauritius Investment Ltd, a JPMorgan entity, remains barred from participating in the closing auction session pending the outcome of the investigation, the sources said, speaking on condition of anonymity because the matter is confidential.

SEBI, JPMorgan and Mansi Share and Stock Broking did not immediately respond to requests for comment.