Why Has SEBI Prohibited US Firm Jane Street from Indian Markets?

Synopsis
Key Takeaways
- SEBI has imposed a ban on Jane Street and its affiliates.
- They must deposit Rs 4,843.5 crore in illegal gains.
- A debit freeze has been ordered on their bank accounts.
- Jane Street allegedly manipulated the market on several expiry days.
- The firm disputes SEBI's findings and intends to engage further.
Mumbai, July 4 (NationPress) The Securities and Exchange Board of India (SEBI) has issued a ban on the US trading firm Jane Street along with three of its affiliated entities, prohibiting them from participating in the market. They have been instructed to deposit illegal earnings amounting to Rs 4,843.5 crore into an account designated for the markets regulator.
In its ruling, the regulator has also mandated a debit freeze on the bank accounts of these entities, which consist of JSI2 Investments Private Ltd, Jane Street Singapore Pte. Ltd, and Jane Street Asia Trading Ltd.
As per the SEBI order, Jane Street accrued Rs 43,289.33 crore in profits through trading in index options on Indian exchanges from January 1, 2023, to March 31, 2025.
According to the order, on 14 expiry days, Jane Street aggressively purchased Bank Nifty futures in substantial volumes in both the cash and futures segments, while also selling Bank Nifty options in large quantities, primarily in the morning.
Post-noon, the entities of Jane Street continued to sell significant volumes in Bank Nifty futures, impacting the closing index on expiry days.
On the morning of January 17, 2024, Jane Street made aggressive purchases of Bank Nifty futures worth Rs 4,370 crore and sold Bank Nifty options for Rs 32,115 crore. After noon, it further sold Bank Nifty futures for Rs 5,372 crore.
This resulted in a peak short position of Rs 46,620 crore in the Bank Nifty index options segment, leading to a subdued closing for Bank Nifty.
Jane Street realized a profit of Rs 735 crore in the options segment, while incurring an intraday loss of Rs 61.6 crore in cash and futures, yielding a net gain of Rs 673.4 crore on that expiry day.
The market regulator's order serves as an enforcement measure, affecting all Jane Street Group entities operating in India and limiting their ability to engage in any market-related activities.
“Entities are restricted from accessing the securities market and are consequently barred from purchasing, selling, or otherwise engaging in securities, either directly or indirectly,” SEBI stated in its order.
Jane Street has contested the findings of SEBI's interim order and plans to further engage with the regulator.