The Securities and Exchange Board of India (SEBI) has issued an interim order barring U.S.-based trading firm Jane Street and its affiliates from participating in India’s securities markets. The action follows allegations that Jane Street engaged in manipulative trading practices involving the Bank Nifty index, leading to unlawful gains of approximately ₹4,843 crore ($567 million).
Allegations and Trading Strategies
SEBI’s investigation revealed that Jane Street executed a series of trades designed to manipulate the Bank Nifty index. The firm allegedly conducted large-scale purchases of Bank Nifty futures and equities in the morning sessions, followed by aggressive selling of Bank Nifty options. Later in the day, Jane Street reportedly sold off its futures positions, impacting the index’s closing levels on expiry days.
This pattern of trading was observed on multiple occasions, with SEBI identifying at least 21 instances where such strategies were employed to influence the market. The regulator contends that these actions created artificial market conditions, misleading retail investors and violating fair trade practices.
Regulatory Actions and Market Impact
In response to these findings, SEBI has:
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Prohibited Jane Street and its related entities from accessing Indian securities markets until further notice.
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Ordered the firm to deposit the alleged unlawful gains into an escrow account under regulatory supervision.
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Directed banks to ensure that no debits are made from Jane Street’s accounts without SEBI’s permission.
The ban has had immediate repercussions on the Indian financial markets. Shares of brokerage firms and exchange operators, including Nuvama Wealth Management and the Bombay Stock Exchange (BSE), experienced declines following the announcement.
Jane Street’s Response
Jane Street has disputed SEBI’s findings and expressed its intention to engage with the regulator to address the allegations. The firm emphasized its commitment to operating in compliance with regulations across all jurisdictions.
