Jane Street Fallout: Exchanges Not Monitoring Other High Frequency Trading Firms

Indian stock exchanges are not currently monitoring any foreign high-frequency trading (HFT) firms other than Jane Street, people in the know told NDTV Profit.

So far, there is no directive from the Securities and Exchange Board of India (SEBI) to scrutinise global trading giants like Citadel or Millennium. Surveillance and alerts have not flagged any unusual trading activity or volume-based triggers from these entities either, sources confirmed.

Jane Street, however, remains under active monitoring by the exchanges. The firm has adopted a cautious approach despite receiving SEBI’s clearance to resume trading. It is currently refraining from high-volume trades, as it awaits clarity on the regulator’s ongoing probe.

Sources indicate that SEBI’s investigation is looking beyond potential manipulation in the NSE’s Bank Nifty index and could expand in scope. Jane Street, meanwhile, has requested additional time to submit its response to SEBI.

In its last interaction with the regulator, the firm gave an undertaking to steer clear of any rule violations, sources said.

It is important to note that SEBI’s probe could potentially widen in scope, prompting Jane Street entities under examination to take a more restrained approach.

SEBI had barred Jane Street Group entities from accessing the Indian securities market and directed the impounding of Rs 4,843.57 crore in alleged unlawful gains from the group.

According to SEBI’s order, Jane Street earned Rs 43,289.33 crore in profits through trading in index options on Indian exchanges between Jan. 1, 2023, and March 31, 2025.

The market regulator passed the order as part of enforcement action. It applies to all Jane Street Group entities operating in India and restricts their ability to trade or participate in any market-related activity.

"Entities are restrained from accessing the securities market and are further prohibited from buying, selling, or otherwise dealing in securities, direct or indirect," SEBI said in an order.

The regulator asked that Jane Street entities jointly and severally deposit the amount into an escrow account with a scheduled commercial bank in India, which the firm did.

In April 2024, the regulator acted upon some media reports informing on a legal matter of Jane Street Group. The issue pertained to unfair use of prop trading methods in the Indian stock market.

Thereafter, in July, the National Stock Exchange looked into the issue, and upon an interaction with SEBI in August, the group gave its side of the story. While the proceedings were still brewing up, the Indian markets saw one of the biggest derivatives trading norms rejigs in October.

SEBI issued a circular announcing a series of policy steps in order to address what was seen as overtrading in index options on expiry day.

On Nov. 13, 2024, the NSE examination report on JS Group’s trading activity was submitted, and later, as per the order, the exchange observed what appeared to be abnormally high or low volatility on weekly index options expiry days.

Further, SEBI noted that there were certain entities consistently running what appeared to be by far the largest risks in ‘cash equivalent’ terms in F&O, particularly on expiry days, the order read.

The group was found to have continued with these trading activities despite receiving a cautionary letter from NSE.