Jane Street has told staff it will contest a ban by India’s financial regulator which has accused the U.S. high-frequency trading giant of market manipulation.
Nurphoto | Nurphoto | Getty Images
Jane Street has told staff it will contest a ban by India’s financial regulator which has accused the U.S. high-frequency trading giant of market manipulation, adding that its practices in question were “basic index arbitrage trading”.
Jane Street said it was “beyond disappointed” by what it called “extremely inflammatory” accusations from the Securities and Exchange Board of India (SEBI) and is working on a formal response, according to an internal email sent to employees over the weekend that was seen by Reuters.
The email did not elaborate on the potential action that Jane Street might take.
SEBI on Friday barred the firm from buying and selling securities in the Indian market and seized $567 million of its funds.
It alleged that Jane Street bought large quantities of constituents in India’s Bank Nifty index in the cash and futures markets to artificially support the index in morning trade, while simultaneously building large short positions in index options which were exercised or allowed to expire later in the day.
The regulator, which tracked Jane Street’s trading patterns for more than two years, has also widened its investigation to include other indexes and exchanges, a source has said.
Over the past three years, India’s derivatives market has had explosive growth as retail investors swarmed in and is now the world’s largest. But that has also led to losses for many ordinary investors, which has become a concern for regulators.
