Jane Street barred from Indian markets in probe by SEBI

The Securities Exchange Board of India (SEBI) has temporarily barred Jane Street Group from accessing India’s securities market, after it accused the U.S. firm of widespread market manipulation.

According to an interim order posted on the regulator’s website on Thursday, Jane Street’s “entities are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly.”

SEBI also issued an interim order to freeze over 48.4 billion Indian rupees ($566.3 million) from Jane Street in alleged illegal gains. It further stated that banks have been directed to ensure that “no debits are made, without permission of SEBI,” for accounts held by Jane Street’s entities either jointly or individually.

Jane Street disputed the findings of SEBI’s interim order and said it will further engage with the regulator, in response to queries from CNBC. A Jane Street spokesperson added that the firm “is committed to operating in compliance with all regulations in the regions we operate around the world.”

Jane Street allegedly used various strategies to artificially influence India’s benchmark Nifty 50 index — which tracks the country’s top 50 companies — and profit from significantly larger positions in index options.

According to SEBI’s 105-page interim order, Jane Street would aggressively buy large amounts of stocks and futures that are part of the BANKNIFTY index, which tracks the performance of India’s banking sector, early in the trading day. The quantitative trading firm would then place large bets that the index would decline later in the day.

Jane Street would then sell off the positions it had bought earlier, dragging the index lower and making their earlier bets in the options market far more profitable.

While Jane Street would incur some losses, SEBI contended that it was part of a “deliberate strategy to manipulate indices to the advantage of the trading and positions,” and the losses were offset by the firm’s much larger and profitable options trade.

While these actions were not a breach of any regulation, SEBI said that the “intensity and sheer scale” of their intervention, and the rapid reversal of their trades “without any plausible economic rationale, other than the concurrent activity in and impact on their positions in the BANKNIFTY index options markets,” was manipulative.

Options trader Mayank Bansal noted that Jane Street’s actions had been ongoing since July 2023, and their alleged manipulations were increasing before peaking in 2024.

“As an options trader, I could see the manipulation happening live on the screen, and so could other traders on every expiry day,’ added the president of a UAE-based hedge fund, who declined to disclose the name of his company.

While he lauded SEBI’s actions, Bansal said that the regulator should recover any unlawful gains, and a ban on Jane Street “is the bare minimum.”

SEBI noted that repeated instances of manipulative trading continued on the broader Nifty 50 benchmark even after an “explicit advisory” was issued to the firm in February 2025 by the National Stock Exchange of India.

“Such egregious behaviour, in clear disregard/ defiance of the explicit advisory issued to them by NSE in February 2025, amply demonstrates that unlike the vast majority of Foreign Portfolio Investors and other market participants, [Jane Street] Group is not a good faith actor that can be, or deserves to be, trusted,” the regulator said.

“The integrity of the market, and the faith of millions of small investors and traders, can no longer be held hostage to the machinations of such an untrustworthy actor,” SEBI added.

Deven Choksey, founder and managing director of wealth management firm DRChoksey FinServ, said SEBI’s crackdown on Jane Street sets a “good example.”

“Any player who is abusing the market requires to be shown the discipline. The regulator is doing their job for keeping intact the market integrity,” he told CNBC.

While the execution of trades can be customized based on the needs and profile of the trader, price discovery in the market should be “universal for all,” Choksey added.

Kranthi Bathini, director of equity strategy at WealthMills Securities, noted that some companies may “get into the market with creative and innovative strategies to exploit investors.” Therefore, SEBI needs “to protect the interests of retail investors,” he added.

Any impact on markets as a result of this decision will be short-term, Bathini said.

SEBI’s move comes as several other global trading firms, from Citadel Securities and IMC Trading to Millennium and Optiver, have been stepping up their presence in India, to ride on its booming derivatives markets, which is the world’s largest by contracts traded.

The Indian regulator had previously expressed concerns over practices such as algorithmic trading, which SEBI said in a September 2024 report allowed proprietary traders and foreign portfolio investors to make 610 billion Indian rupees in profits in FY 2024, while retail investors and other market participants lost the same amount during that period.

 — CNBC’s Aparajita Saxena contributed to this report