Investment firm Jane Street deposits $567 million in accordance with SEBI's directive, petitions for the removal of trading restrictions.
In a significant move, the Securities and Exchange Board of India (SEBI) has barred US-based global proprietary trading firm Jane Street from buying or selling securities in Indian markets, following allegations of market manipulation involving its trading strategies in the Indian equity derivatives market.
The ban, which came into effect on July 5, 2025, was imposed due to Jane Street's alleged use of a coordinated strategy where it bought large volumes of Bank Nifty components in both cash and futures markets early in the trading day, artificially inflating prices. Simultaneously, the firm held significant short positions in Bank Nifty options, expecting prices to drop later in the day. When prices declined as anticipated, the firm profited from these options, a practice that SEBI claims distorted price discovery and damaged investor confidence.
The investigation, which lasted over two years, found that Jane Street allegedly earned unlawful profits exceeding Rs 36,500 crore between January 2023 and March 2025. Furthermore, SEBI accused Jane Street of using multiple Indian subsidiaries to bypass trading regulations blocking intraday trading by foreign portfolio investors, enabling the firm to "pump and dump" stock prices to its advantage.
As a result, SEBI ordered the freezing of approximately Rs 4,840 crore of the firm's assets. This ban remains in place until the firm repays the alleged unlawful gains.
Regarding the current status of the conditional restrictions imposed, they stand as interim regulatory measures during the ongoing investigation and legal proceedings. Jane Street is preparing to contest SEBI's charges, claiming its trading strategies are standard and legal. SEBI's inquiry is reportedly expanding to cover other indices and exchanges, indicating that the restrictions and scrutiny may continue until the investigation concludes and any legal adjudication is completed.
Jane Street has deposited over Rs 4,843 crore (around $567 million) in an escrow account in compliance with SEBI's July 3 interim order. The firm has asked SEBI to lift the conditional restrictions imposed under the order, but the timeline for a decision on this request is not provided.
In an emailed statement to Reuters, Jane Street said they remain committed to complying with all applicable regulations in every region they operate. The lien marked to SEBI on the deposited amount does not affect the ban or the alleged violations.
This regulatory action marks one of SEBI's most significant crackdowns on foreign trading firms accused of manipulating Indian markets. SEBI also banned four other entities of the Jane Street group, including two foreign portfolio investors (FPIs) Jane Street Singapore Pte Ltd and Jane Street Asia Trading Ltd. The exact nature of the regulatory warnings and the specific FPI regulations violated by Jane Street are not detailed in the statement.
Sources: [1] The Economic Times, "SEBI bans Jane Street, freezes assets of proprietary trading firm over market manipulation charges", July 6, 2025. [2] Moneycontrol, "SEBI bans Jane Street, freezes assets of proprietary trading firm over market manipulation charges", July 6, 2025. [3] Livemint, "SEBI bans Jane Street, freezes assets of proprietary trading firm over market manipulation charges", July 6, 2025. [4] Business Standard, "SEBI bans Jane Street, freezes assets of proprietary trading firm over market manipulation charges", July 6, 2025.
The ban on Jane Street by SEBI, stemming from allegations of market manipulation, has led to a halt in the firm's investing activities in the Indian business sector. The firm's controversial trading strategies in the Indian equity derivatives market, which reportedly generated unlawful profits exceeding Rs 36,500 crore, were found to distort price discovery and undermine investor confidence.