SEBI Acts Fast On Some Cases, Slow On Others

The Securities and Exchange Board of India (SEBI) recently issued an order against a foreign portfolio investor and a domestic broker for alleged manipulation during the Closing Auction Session on the BSE Sensex expiry of August 13. The regulator acted swiftly, impounding the alleged gains and imposing interim restraints just within six days of the trades.

This swift action is significant, as it demonstrates that SEBI possesses the technology, data, expertise, and institutional capacity to analyse sophisticated trading and act almost immediately. However, this raises questions about SEBI's handling of other serious market misconduct cases.

For instance, in a major case involving a global quantitative trading firm, SEBI's investigation began only in April 2024, and the interim order was finally issued in July 2025. The order alleged manipulation of index levels through coordinated trading across cash, futures, and options markets, directing the impounding of ₹5,000 crore in alleged unlawful gains from four trading days.

The issue is not whether SEBI eventually acted, but why an allegation involving thousands of crores and wide market impact required such a prolonged process before interim action was taken. While enforcement across borders can be complex, this cannot excuse multi-year delays when systemic stability is at risk.

Moreover, what happened during that period? If a sophisticated foreign trading firm could allegedly influence cash market prices while holding substantial positions in index derivatives, the obvious regulatory question is whether similar patterns existed on other trading days or among other large participants. SEBI has the data and should inform the market whether it examined that data systematically and what it found.

SEBI's own study found that 1.13 crore individual traders incurred a combined net loss of ₹1.81 lakh crore in equity derivatives during FY22 to FY24, with 91% of individual traders losing money in FY24 alone. Such retail losses impose a higher duty on the regulator to investigate whether sophisticated participants enjoyed structural or informational advantages that ordinary investors did not.

The regulator's silence on this matter is troubling, and it has been conspicuously unwilling to provide the market with a clear account of whether it has looked beyond the specific cases. SEBI's uneven use of enforcement machinery raises questions about its ability to maintain fair and efficient markets.

The significance of this issue goes beyond the specific cases mentioned. It highlights the need for SEBI to be more transparent and consistent in its enforcement actions. The regulator must ensure that it is using its machinery effectively to prevent market manipulation and protect the interests of all investors.

In conclusion, SEBI's uneven use of enforcement machinery is a cause for concern. The regulator must act swiftly and consistently to maintain fair and efficient markets, and it must be more transparent in its actions.

The regulator's ability to act quickly in some cases is commendable, but it must also ensure that it is not slow in acting on other serious cases. The market and investors expect SEBI to be fair, efficient, and transparent in its enforcement actions.

SEBI's actions have a significant impact on the market and investors, and it must ensure that it is using its machinery effectively to prevent market manipulation and protect the interests of all investors.

The regulator's silence on this matter is troubling, and it must provide the market with a clear account of its actions and findings.

SEBI's uneven use of enforcement machinery raises questions about its ability to maintain fair and efficient markets, and it must act swiftly to address these concerns.

In the end, SEBI's actions will determine its credibility and effectiveness as a regulator. It must ensure that it is using its machinery effectively to prevent market manipulation and protect the interests of all investors.