India’s capital markets regulator has barred U.S.-based trading firm Jane Street Group from participating in the country’s securities market, citing alleged manipulation of equity derivatives that led to unlawful gains of ₹48.4 billion (approx. US$721 million).
In a detailed interim order, the Securities and Exchange Board of India (SEBI) accused Jane Street and its India-incorporated entities of employing strategies that distorted the Bank Nifty index — a benchmark tracking major Indian financial stocks — for profit through options trading.
The enforcement action includes a freeze on securities trading and a direction to Indian banks to halt any withdrawals from accounts linked to Jane Street without SEBI’s permission.
“This may signal SEBI’s growing vigilance and willingness to assert control over foreign institutional activity making hefty gains in its derivatives market – particularly where such strategies blur the line between smart trading and market distortion,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore.
Alleged Manipulative Strategies
SEBI’s 105-page order outlines how Jane Street allegedly manipulated the Bank Nifty index by:
- Building large derivative positions tied to the index.
- Simultaneously buying large volumes of constituent stocks in cash and futures markets during morning trade to artificially support the index.
- Later reversing these trades to benefit from options positions — a move that SEBI claims created a misleading appearance of market activity.
The regulator noted that these actions were especially concentrated during the final hour on monthly expiry days, potentially influencing settlement prices.
“JS Group was creating a false or misleading appearance of market activity,” the order stated, calling the conduct “egregious manipulation” to the detriment of thousands of smaller market participants.
Regulatory Breach and Market Impact
Jane Street is accused of circumventing Indian rules that restrict foreign portfolio investors from intraday trading in the cash market by setting up domestic entities. The trading activity reportedly netted the firm more than US$2.3 billion in 2024 through India’s derivatives market — the largest globally by contracts traded.
Jane Street, which began operations in India in December 2020, said in an emailed statement that it “disputes the findings of the SEBI interim order” and plans to cooperate further with the regulator.
“Jane Street is committed to operating in compliance with all regulations in the regions we operate around the world,” the company said.
What Happens Next
The company has 21 days to respond to SEBI’s findings and may also file an appeal with the Securities Appellate Tribunal.
SEBI’s order comes amid increasing scrutiny of high-frequency and algorithmic trading in Indian markets, where international firms such as Citadel Securities and Optiver have expanded in recent years.
