SEBI’s decisive action follows an investigation triggered by market participant complaints alleging expiry-day manipulation by Jane Street. |Image: WikiCommons|
India’s market regulator SEBI has barred US trading firm Jane Street Group from accessing Indian securities markets and ordered the freezing of Rs 4,843 crore in alleged unlawful gains. The crackdown comes amid allegations of expiry-day manipulation in India’s booming equity derivatives market, where Jane Street reportedly earned over $2.3 billion in net revenue last year.
The Securities and Exchange Board of India (SEBI) began scrutinizing Jane Street’s trading activity following media reports in April 2024 that flagged a legal dispute over the alleged unauthorized use of proprietary trading strategies in Indian markets. By July 2024, SEBI had directed the National Stock Exchange (NSE) to examine Jane Street’s trades for potential market abuse.
After a series of interactions, Jane Street submitted explanations in August 2024. However, SEBI’s concerns deepened following an NSE report in November 2024 that identified abnormal volatility on weekly index options expiry days. SEBI observed that Jane Street and certain other entities consistently carried unusually large cash-equivalent positions, particularly on expiry days, raising suspicions of market manipulation.
In February 2025, SEBI found prima facie evidence that Jane Street’s activities violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations. The NSE issued a caution letter to Jane Street, urging them to desist from such trading patterns. Despite this, by May 2025, Jane Street was found to have continued running large positions in index options, ignoring the warning.
Following these findings, SEBI imposed a ban preventing Jane Street Group entities from trading in Indian securities markets and ordered banks to block transactions from accounts held by these entities without SEBI’s prior approval.
India’s derivatives market, the largest globally by contracts traded, has seen significant growth with the expansion of US-based high-frequency trading and market-making firms like Jane Street. SEBI’s action underscores its commitment to curbing market manipulation and maintaining fair trading practices as foreign players increasingly participate in India’s fast-growing financial markets.
Jane Street Group has indicated it will engage with SEBI regarding the matter and reaffirmed its commitment to global regulatory compliance.
