Mumbai: India’s securities regulator barred U.S. trading company Jane Street from the local securities market, saying an investigation found it manipulated stock indices through positions taken in derivatives.
The Securities and Exchange Board of India (SEBI) posted an interim order on its website dated July 3 outlining that Jane Street would no longer be able to participate in the domestic securities market. The ban will stay in place till a final order on completion of investigations is issued.
SEBI also said it would ‘impound’ 48.4 billion rupees ($566.71 million) from Jane Street, which it said were the ‘unlawful gains earned’ from the alleged misconduct.
“Entities are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly,” the SEBI notice said, referring to Jane Street entities.
Jane Street, in an emailed response, said it disputes the findings of the SEBI interim order and will further engage with the regulator. “Jane Street is committed to operating in compliance with all regulations in the regions we operate around the world,” the firm said.
News of SEBI‘s actions comes as half a dozen global trading firms, from Citadel Securities and IMC Trading to Millennium and Optiver, are ratcheting up their presence in India’s booming derivatives markets.
India is the world’s largest derivatives market, accounting for nearly 60% of global equity derivative trading volumes of 7.3 billion in April, the Futures Industry Association says.
SEBI, in its 105-page order, alleged that Jane Street and its India incorporated entities took large derivative positions to manipulate the Bank Nifty index, a grouping of 12 financial sector firms and a favourite in the derivative markets.
“This is an unusual case where prima facie, multiple liquid stocks with high retail participation have together been manipulated to facilitate the manipulation of the index options market, resulting in massive profits for the manipulators, at the cost of other participants and retail traders,” the order said.
The regulator said that by incorporating entities in India, Jane Street also managed to “work around” Indian regulations that prohibit foreign portfolio investors from undertaking intraday positions in the cash market.
Overall, Jane Street made a profit of 365 billion Indian rupees during the examination period between January 2023 and March 2025, SEBI said in its order.
Market Implications
“Not all foreign players are abusing the market,” said Deven Choksey, managing director at DRChoksey FinServ. “We do not see other foreign investors either unwinding any positions or being nervous because of the SEBI order.”
A source familiar with the regulator’s thinking said the decision to bar Jane Street was announced on a Thursday evening after the derivative cycle expiry for the week to limit any wider impact on the markets.
Also, starting July 1, the regulator has tightened rules for positions being taken in derivatives which would help limit the impact if any, the source said.
Market liquidity is unlikely to be impacted, the source said, declining to be identified as they are not authorised to speak to the media.
An email sent to a SEBI spokesperson was not immediately answered.
(Reporting by Anusha Shah, Surbhi Misra and Vivek Kumar M in Bengaluru, Scott Murdoch in Sydney and Ira Dugal in Mumbai; Editing by Alan Barona and Muralikumar Anantharaman)
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