Market regulator Securities and Exchange Board of India (SEBI) has barred the US trading entity Jane Street and three of its other related entities from accessing the market in an interim order date July 3. SEBI has also directed these entities to deposit the illegal gains of Rs 4843.5 crore. The regulator has also directed for debit freeze on bank accounts of such entities. SEBI alleged that Jane Street and related entities manipulated the indices on expiry days. The regulator has also directed for debit freeze on bank accounts of such entities. Here's how the entire saga unfolded:
April 2024
In April 2024 media reported about the dispute between Jane Street group and Millennium management involving trading strategy secrets related to Indian stock market. This disclosed that Jane Street had made $1 billion from trades in India’s equity derivatives market using a secret trading strategy. SEBI picked up and analysed the media reports and started its own investigation.
July 2024
NSE was asked to examine the trading activity of the Jane Street group to ascertain if there was any market abuse involved.
August 2024
SEBI interacted with Jane Street group on August 20, 2024 and Jane Street provided its written submission dated August 30, 2024 to SEBI explaining their trades.
October 1, 2024
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.
November 13, 2024
NSE examination report on Jane Street group’s trading activity was submitted.
December 2024
SEBI observed what appeared to be abnormally high or low volatility on weekly index options expiry days. Further, SEBI noted that there were certain entities that were consistently running in what appeared to be by far the largest risks in ‘cash equivalent’ terms in F&O, particularly on expiry days. SEBI constituted a team of officials to further examine the issue in a more detailed and comprehensive manner.
February 04, 2025
The team of officials noted, that prima facie, Jane Street Group appeared to be engaging in activities in violation of SEBI PFUTP regulations.
February 6, 2025
While the detailed examination was ongoing, with a view to ensure that Jane Street group desisted from undertaking trading patterns that were prima facie fraudulent and manipulative, on SEBI’s instructions, NSE, as a first line regulator, issued a caution letter to Jane Street Singapore Pte Limited and its related entity, JSI Investments Pvt Ltd. advising them to refrain from taking large (cash-equivalent) positions and to refrain from undertaking certain trading patterns.
JS Group sent their replies to the caution letter on February 6th and 21st, 2025.
May 15, 2025
SEBI found in disregard of the caution letter from the NSE issued in February 2025, and Jane Street’s own commitments to the NSE, Jane Street was observed to continue to run very large ‘cash equivalent’ positions in index options.
July 3, 2025
SEBI said it would 'impound' Rs 4,840 crore from Jane Street, which it said were the 'unlawful gains earned' from the alleged misconduct.
SEBI in its interim order said, “If, after detailed investigation it transpires that the market was in fact not manipulated by Jane Street, the alleged illegal gains that have been impounded will be released for their use and they shall be free to continue with their business”.
SEBI said, if interim directions are not passed now, and it transpires after detailed investigation that illegal gains had in fact been made which were diverted, the loss to market integrity, investor protection, investor confidence and the futility of the post-investigation remedial measures, all will result in severe and irreparable damage.
SEBI order said, considering the unprecedented scale and complexity of the violations involved, the time needed to complete the investigation and consequent action can be significant. If such investigation eventually does not result in a finding against the entities, the adverse impact of the interim restraint on the entities may not be remediable.
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