Jane Street Fires Back at SEBI: Firm Prepares Formal Challenge to Market Ban and Asset Freeze

Global quant trading powerhouse Jane Street is mounting a robust defense against the Securities and Exchange Board of India’s (SEBI) sweeping interim order, which bars the firm from Indian markets and freezes over ₹4,840 crore in alleged unlawful gains. In an internal memo seen by Reuters, Jane Street categorically rejects both the premise and substance of SEBI’s findings, signaling its intent to contest the charges through all available channels.

 

Key Highlights

 

•⁠  ⁠SEBI’s interim order, issued July 3, 2025, accuses Jane Street and four affiliates of manipulating India’s Nifty and Bank Nifty indices, using high-volume, cross-segment strategies on expiry days to distort prices and reap massive profits. The regulator claims Jane Street earned an estimated ₹36,500 crore in profits between January 2023 and March 2025, with ₹43,289 crore generated from index options alone. Banks have been ordered to freeze ₹4,840 crore in the firm’s India-linked accounts, prohibiting any withdrawals without SEBI’s approval.

 

•⁠  ⁠Jane Street, in its memo, states it is working on a formal response and “rejects the premise and substance of the order in the strongest possible terms.” The firm insists it operates in compliance with all global regulations and plans to engage further with SEBI to address the allegations.

 

•⁠  ⁠SEBI’s investigation alleges that Jane Street deployed “Intra Day Index Manipulation” and “Extended Marking the Close” strategies—buying large quantities of index stocks in the morning to artificially inflate prices, then reversing trades later in the day to benefit from bearish options positions. The regulator contends these tactics misled retail investors and manipulated expiry-day settlement prices.

 

•⁠  ⁠The crackdown follows months of scrutiny, with the National Stock Exchange (NSE) first raising alarms and issuing a caution letter to Jane Street in February 2025. SEBI claims the firm ignored these warnings and continued its trading practices.

 

•⁠  ⁠Jane Street has 21 days to file objections or seek a hearing before the Securities Appellate Tribunal. The firm’s India operations, launched in December 2020, have drawn global attention after legal disputes and reports of billion-dollar profits from Indian derivatives trading.

 

Industry Impact and Next Steps

 

•⁠  ⁠SEBI’s action is part of a broader clampdown on high-frequency and foreign proprietary traders amid concerns about market fairness and the impact on retail investors.

 

•⁠  ⁠Jane Street’s response and the eventual outcome could set key precedents for international trading firms operating in India’s rapidly growing derivatives market.

 

Sources: Reuters