Indian regulator prohibits US firm Jane Street from accessing securities market

India’s securities regulator, the Securities Exchange Board of India (SEBI), has taken decisive action against the U.S. firm Jane Street Group for alleged market manipulation. The regulator issued an interim order restraining Jane Street’s entities from participating in the securities market and dealing in securities directly or indirectly.

SEBI has frozen over $566.3 million from Jane Street in alleged illegal gains. Banks have been directed not to allow any debits without permission from SEBI for accounts held by Jane Street’s entities, jointly or individually.

Jane Street has refuted SEBI’s findings and stated that it will engage with the regulator to address these accusations. The firm emphasized its commitment to complying with regulations in all regions where it operates.

The allegations against Jane Street revolve around its manipulation of the Nifty 50 index, India’s top 50 company benchmark. Jane Street allegedly engaged in various strategies to artificially influence the index and profit from large positions in index options.

SEBI’s interim order, spanning 105 pages, detailed how Jane Street aggressively purchased stocks and futures in the BANKNIFTY index, which tracks India’s banking sector, early in the trading day. Subsequently, the firm placed large bets on the index declining later in the day. By selling off the previously acquired positions, Jane Street was able to influence the index downward, making their options trades more profitable.

While SEBI acknowledged that these actions were not strictly against regulations, it raised concerns about the intensity and scale of Jane Street’s interventions. SEBI pointed out that the rapid reversal of trades without any economic rationale, except for the impact on their positions in the BANKNIFTY index options markets, was manipulative.

Despite an advisory issued by the National Stock Exchange of India in February 2025, Jane Street’s manipulative trading practices persisted. SEBI emphasized that the firm’s behavior demonstrated a lack of good faith and trustworthiness, posing a threat to the market integrity and the confidence of small investors and traders.

SEBI’s actions against Jane Street come amidst a backdrop of increased interest from global trading firms in India’s derivatives market. The regulator’s concerns over practices like algorithmic trading, which have allowed certain traders to profit significantly while others incurred losses, indicate a broader issue of market fairness and integrity.

The case of Jane Street highlights the importance of regulatory oversight and vigilance in maintaining a level playing field in financial markets. It serves as a reminder that market participants must operate in good faith and adhere to regulatory guidelines to safeguard market integrity and protect the interests of all investors.