- Jane Street will contest SEBI’s trading ban (Jane Street to challenge India), calling the allegations “extremely inflammatory.”
- The firm told employees its trading involved “basic index arbitrage”, a standard market practice.
- SEBI barred Jane Street from Indian markets and seized $567 million, citing manipulation of the Bank Nifty index.
- The regulator alleges Jane Street:
- Bought Bank Nifty constituents in cash/futures to inflate the index early in the day
- Built large short options positions to profit later from the artificially high levels
- Bought Bank Nifty constituents in cash/futures to inflate the index early in the day
- Jane Street maintains this is normal arbitrage to align prices of related instruments.
- The firm says it modified trading behavior after meetings with SEBI and exchanges and continued communication since February—but claims it was ignored.
- SEBI has expanded its investigation to other indices and exchanges.
- Jane Street is looking for Indian legal representation and is expected to appeal at the Securities Appellate Tribunal.
- SEBI had no further comment beyond its July 3 order.
- SEBI Chairman Tuhin Kanta Pandey noted increased scrutiny on derivatives, but said few other cases like Jane Street’s are likely.
- India’s derivatives market is now the largest globally, drawing foreign firms like Citadel, IMC Trading, Millennium, and Optiver.
Data shows (Jane Street to challenge India) Indian retail traders lost ₹1.06 trillion ($12.4 billion) in equity derivatives in FY24—a 41% increase over the previous year.
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