India's market regulator banned a Mauritius-based unit of JPMorgan Chase & Co. from the capital market over alleged manipulative trading in the South Asian nation's newly introduced auction-based system for share price discovery. The action underscores heightened oversight of foreign participants in domestic equity markets.

The Securities and Exchange Board of India impounded 37 million rupees ($386,000), which the regulator described as wrongful gains made by JPMorgan unit Copthall Mauritius Investment Ltd. and local firm Mansi Share and Stock Broking Ltd., according to an initial order published late Wednesday. The regulator alleged coordinated trades distorted the auction process.

The order marks a significant enforcement action against a major global bank's subsidiary, highlighting regulatory scrutiny of the new price discovery mechanism. The ban restricts the entities from accessing Indian securities markets pending further proceedings, with potential implications for cross-border investment flows.