Jane Street Holds Back On Big Trades In Indian Markets Despite SEBI's Green Signal

Global trading firm Jane Street is treading cautiously in the Indian market despite receiving regulatory clearance to resume trading, sources told NDTV Profit.

The firm is currently in a wait-and-watch mode and has refrained from engaging in high-volume transactions. This cautious approach comes in the wake of intensified scrutiny by Indian market regulator Securities and Exchange Board of India (SEBI), which is examining whether alleged manipulation extended beyond the Bank Nifty index on the National Stock Exchange.

People in the know have indicated that Jane Street has sought additional time from SEBI to file its official response in the ongoing investigation. During its last interaction with the regulator, the firm reportedly gave an undertaking to ensure compliance with all market norms.

SEBI's probe could potentially widen in scope, prompting firms under examination to take a more restrained approach until further clarity emerges.

The Background

The Securities and Exchange Board of India 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.

Jane Street Timeline

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.