Angel One and Nuvama decline after SEBI sanctions Jane Street for index options trades in Indian markets.

On Friday, the stock market experienced significant selling pressure as the Securities and Exchange Board of India (SEBI) took action against Jane Street Group, barring its entities from participating in the Indian securities market. SEBI’s move followed allegations of market manipulation by the US firm, specifically in relation to the Bank Nifty index. An interim order was issued to recover over ₹4,840 crore in alleged illicit gains from Jane Street, with SEBI stating that the firm had accumulated profits of ₹43,289 crore from trading index options on Indian exchanges from January 1, 2023, to March 31, 2025.

Following this development, Angel One and Nuvama shares experienced declines of 6% and 5%, respectively. Other capital market stocks including BSE, IIFL Capital, and CDSL also witnessed drops ranging from 4% to 2% on Friday.

SEBI’s investigation revealed that Jane Street employed aggressive options strategies to influence prices in the underlying cash and futures markets. Specifically, the firm engaged in activities during weekly index option expiries to profit from potential index manipulation.

The key points outlined in SEBI’s interim order include:

1. Market Access Prohibition: Jane Street and its affiliates are prohibited from engaging in securities transactions in India until further notice.
2. Escrow Deposit Requirement: A total sum of ₹4,843 crore must be deposited collectively and individually by the entities into an escrow account, subject to SEBI’s control and inaccessible without regulatory approval.
3. Banking Restrictions: Banks, depositories, and custodians have been instructed to limit debit transactions from Jane Street’s accounts unless required to comply with SEBI’s mandate.
4. Mandatory Closure of Positions: Jane Street must close or square off all open positions within three months or at contract expiry, whichever comes first.
5. Asset Disposal Constraints: The entities are prohibited from disposing of assets in India until the impounded amount is transferred to the escrow account, except with prior consent from SEBI.
6. Regulatory Oversight: SEBI will monitor Jane Street’s operations and positions until the investigation concludes.

Despite SEBI’s findings, Jane Street has contested the validity of the interim order and expressed its intention to engage further with the regulator to address the situation.