The Securities and Exchange Board of India has initiated what could turn into a lengthy investigation into the trades of Jane Street.
This interim order is not a show-cause notice and it clearly indicates that investigations into Jane Street will continue, according to a SEBI official familiar with the matter.
The official added that the interim order examined only 18 major instances so far of prima facie Bank Nifty index manipulation on expiry days between January 2023 and March 2025, and three instances involving the Nifty index on expiry days in May 2025. Investigations into other expiry days, other indices (including across exchanges), and any additional suspicious patterns will continue.
Given the wide scope of the case, it is difficult to estimate how long the complete investigation will take, the official said. SEBI is expected to analyse a substantial volume of trade data, which could take until the end of this calendar year.
Once the investigation is complete, SEBI will issue a show-cause notice to Jane Street, giving the US hedge fund an opportunity to present its side. After reviewing the submissions, the regulator will then issue a confirmatory order.
The regulator will examine not just the technical aspects of algorithmic trading but will also hold every user of an algorithm accountable for its output, the official added.
SEBI believes the interim order would not have any major market impact. To limit excessive risk-taking without affecting regular participants, exchanges and regulators have introduced delta-based (future-equivalent) limits for index options, effective July 1.
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