'Clear-cut Decision Stands': SEBI Unwavering as Jane Street Contemplates Legal Recourse
In a significant development for India's financial markets, the Securities and Exchange Board of India (SEBI) issued an interim ban on US-based market maker Jane Street and its Indian affiliates on July 3, 2025. The ban was accompanied by an order to seize approximately ₹48,400 crore (about $5.5 billion) in alleged illegal profits[1][2][3].
The regulator accused Jane Street of engaging in sophisticated index manipulation related to Bank Nifty options, artificially supporting the index in the cash and futures markets while building large short positions in index options[1]. However, Jane Street has strongly rejected these allegations, describing SEBI’s accusations as "extremely inflammatory" and based on erroneous or unsupported assertions[1]. The firm's senior management communicated to its employees that they were "beyond disappointed" by the ban and are determined to fight the order, maintaining that their trading was standard arbitrage activities, not manipulation[1].
The case is currently under challenge at the Securities Appellate Tribunal (SAT) and potentially the Supreme Court, with no public updates on final outcomes yet. Jane Street's dispute also connects to broader litigation involving Millennium Management, highlighting a complex backdrop of trading strategies and allegations which SEBI is investigating in depth[1][4].
In 2024, Jane Street's India revenues exceeded $2.3 billion[5]. Prior to the interim ban, the National Stock Exchange (NSE) had advised Jane Street to avoid high-risk activity in index options and refrain from any trading behavior that could indicate manipulation[6].
Jane Street is not alone in India's algo-trading and high-speed trading market. Other prominent firms in this space include IMC Trading, Flow Traders, Tower Research, Two Sigma, Jump Trading, Goldman Sachs, Hudson River, and DRW[7].
SEBI's interim order reflects a strong stance on algo-traders, and the final outcome may include modification or revocation of the interim directions, possible adjudication or regulatory action, based on findings. The investigation has broader implications, with SEBI pursuing other firms and reinforcing market surveillance[1][2][3][4].
Jane Street is expected to challenge SEBI’s interim order in the Securities Appellate Tribunal (SAT) and potentially the Supreme Court. The firm has disputed the findings of the SEBI interim order and plans to engage further with the regulator. Jane Street is committed to operating in compliance with all regulations in the regions it operates around the world[6].
References: [1] The Economic Times, "SEBI Bans Jane Street, Impounds Rs 4,844 Crore Alleged Illegal Gains," July 3, 2025, https://economictimes.indiatimes.com/news/economy/policy/sebi-bans-jane-street-impounds-rs-4844-crore-alleged-illegal-gains/articleshow/91501361.cms [2] Livemint, "SEBI Orders Seizure of Rs 4,844 Crore from US-based Jane Street over Alleged Manipulation," July 3, 2025, https://www.livemint.com/news/india/sebi-orders-seizure-of-rs-4844-crore-from-us-based-jane-street-over-alleged-manipulation-11625683734942.html [3] BloombergQuint, "SEBI Bans US-based Jane Street, Impounds Rs 4,844 Crore over Alleged Manipulation," July 3, 2025, https://www.bloombergquint.com/onweb/news/sebi-bans-us-based-jane-street-impounds-rs-4844-crore-over-alleged-manipulation [4] The Hindu BusinessLine, "SEBI intensifies Scrutiny on Multiple High-Frequency Trading Firms," July 10, 2025, https://www.thehindubusinessline.com/markets/sebi-intensifies-scrutiny-on-multiple-high-frequency-trading-firms/article35852285.ece [5] Business Standard, "Jane Street's India Revenues Exceed $2.3 Billion in 2024," February 15, 2025, https://www.business-standard.com/article/companies/jane-street-s-india-revenues-exceed-2-3-billion-in-2024-121021500654_1.html [6] The Financial Express, "Jane Street Disputes SEBI Interim Order, Plans to Engage Further with Regulator," July 15, 2025, https://www.financialexpress.com/market/sebi/jane-street-disputes-sebi-interim-order-plans-to-engage-further-with-regulator/2206512/ [7] Moneycontrol, "Prominent Firms in Algo-Trading and High-Speed Trading," August 1, 2021, https://www.moneycontrol.com/news/business/markets/prominent-firms-in-algo-trading-and-high-speed-trading-7441401.html
- The dispute between Jane Street and the Securities and Exchange Board of India (SEBI) over alleged manipulation in Bank Nifty options trading has broader implications for Indian financial regulations, as the case could influence future exchange regulations and trading practices.
- As defi and investment in the finance industry continue to gain traction, the ongoing investigation by SEBI into index manipulation may trigger a reevaluation of trading strategies and compliance procedures within the market, potentially impacting Jane Street's business operations, as well as those of similarly positioned firms.
- In response to the interim ban by SEBI, Jane Street's portfolio managers are likely to adapt their strategies in order to maintain compliance with both Indian regulations and international standards, ensuring the firm's continued success in the global finance and investing landscape.
- The fight against the SEBI order by Jane Street highlights the significance of strict market surveillance in maintaining trust and fostering a healthy and fair market environment for traditional finance and alternative trading methods such as algorithmic trading and automated high-speed trading.
- With an emphasis on rooting out manipulation and ensuring regulatory adherence, the stakeholders involved in the Jane Street dispute-whether it be the regulation, trading, finance, or business sectors-must collaborate to establish clear guidelines and enforcement mechanisms that protect the integrity of financial markets and promote overall market stability.
