Jane Street To Fight Back Against SEBI’s Derivatives Manipulation Claims: Report | Markets News

Last Updated:July 08, 2025, 07:44 IST

Jane Street to Challenge SEBI: Jane Street has strongly denied the allegations and is preparing to challenge the ban

Jane Street to Challenge SEBI: The Securities and Exchange Board of India (SEBI) has accused Jane Street, one of Wall Street’s largest proprietary trading firms, of orchestrating “an intentional, well-planned, and sinister scheme” to manipulate Indian markets.

SEBI, in an interim order issued on Friday, banned Jane Street from trading in Indian markets and directed the firm to return over $550 million in what it described as illicit gains. According to the regulator, the firm allegedly manipulated prices of Indian banking stocks to trigger favorable movements in derivatives — specifically Bank Nifty index options — leading to outsized profits.

SEBI Chairman Tuhin Kanta Pandey stated on Monday that the regulator is stepping up surveillance to curb manipulation in the derivatives segment, calling enforcement and oversight more critical than introducing new rules.

SEBI’s Allegations

The regulator’s order accuses Jane Street of purchasing large volumes of Bank Nifty constituent stocks in both the cash and futures markets during early trading hours, thereby artificially inflating index values. At the same time, the firm allegedly built significant short positions in index options, profiting from subsequent price swings later in the session.

Jane Street Pushes Back

Jane Street has strongly denied the allegations and is preparing to challenge the ban. In a memo sent to its 3,000 employees on Sunday, the firm said it was “beyond disappointed” by what it called SEBI’s “extremely inflammatory” claims.

“It’s deeply upsetting to see the firm mischaracterised this way,” the memo read. “We take pride in the role we serve in markets around the world, and it’s painful to have our firm’s reputation tarnished by a report based on so many erroneous or unsupported assertions.”

The Millennium Link

Jane Street’s troubles with SEBI are connected to a lawsuit it filed last year against Millennium Management and two former employees accused of stealing a trading strategy tied to Indian options. SEBI’s investigation zeroed in on trades in the Bank Nifty index, which tracks India’s major banking stocks.

The firm has maintained that its trades were “basic arbitrage” — a widely accepted trading strategy — and not manipulative.

SEBI’s Claims That Jane Street Ignored Prior Warnings

SEBI’s order claims that Jane Street ignored prior warnings from Indian stock exchanges. The firm disputes this assertion, stating in the memo that it had paused trading when concerns were first raised and subsequently modified its approach to align with exchange expectations.

“Once again, we left this process feeling that we had reached an understanding of the concerns and reflected them in modifications to our trading behaviour,” the memo added. It further claimed that since February, efforts to engage with SEBI had been met with silence.

What Happens Next?

Jane Street has 21 days to formally object to SEBI’s interim order and request a hearing. The firm said it is preparing a comprehensive response and will “contest the ban in full.”

Meanwhile, SEBI has indicated that its investigation may be broadened to cover other instruments and trading patterns linked to Jane Street. The outcome could determine the firm’s future access to one of Asia’s largest financial markets.

Aparna Deb

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More

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