Indian regulator bans American trading company Jane Street from entering securities market

The Securities Exchange Board of India (SEBI) has taken action against Jane Street Group for allegedly engaging in market manipulation, alleging that the U.S. firm used various tactics to influence India’s Nifty 50 index artificially. SEBI issued an interim order, prohibiting Jane Street’s entities from participating in the securities market directly or indirectly.

SEBI’s interim order also froze over $566.3 million from Jane Street in alleged illegal gains. Banks have been instructed to refrain from making any withdrawals from accounts held by Jane Street’s entities without SEBI’s permission, jointly or individually.

Jane Street has disputed SEBI’s findings and plans to communicate further with the regulator. A spokesperson for Jane Street emphasized the firm’s commitment to adhering to regulatory requirements in all regions where it operates.

According to SEBI’s 105-page interim order, Jane Street would aggressively purchase large quantities of stocks and futures linked to the BANKNIFTY index, which monitors India’s banking sector, early in the trading session. The firm would subsequently place substantial bets on the index’s decline later in the day, resulting in profitable options trades.

While Jane Street did incur some losses, SEBI argued that the firm’s actions were part of a deliberate plan to manipulate indices for its advantage. Despite not breaching any regulations, SEBI criticized the intensity and scale of Jane Street’s trades, labeling them as manipulative due to their rapid reversal of positions without a plausible economic rationale.

SEBI highlighted repeated instances of manipulative trading on the Nifty50 benchmark even after issuing a warning to Jane Street in February 2025. The regulator stressed that such behavior undermined the trust of small investors and traders in the market.

Deven Choksey, founder of DRChoksey FinServ, commended SEBI’s crackdown on Jane Street, stating that disciplining market abusers is crucial for maintaining market integrity. Choksey emphasized the importance of universal price discovery in the market while allowing customized trade execution based on individual trader profiles.

SEBI’s action against Jane Street comes amid a growing presence of global trading firms in India’s derivatives markets. However, the regulator has expressed concerns over practices like algorithmic trading, which it believes have led to substantial profits for some traders while causing losses for retail investors and other participants.

In conclusion, SEBI’s measures against Jane Street serve as a reminder of the importance of maintaining market integrity and regulating trading practices to protect investors and uphold trust in the financial system. SEBI’s actions underscore the need for transparency and accountability in the securities market to prevent market manipulation and ensure fair trading practices for all participants.