
Sebi probes Jane Street's derivative trades over 3 years: Sources
India's markets regulator is investigating Jane Street's derivatives trades stretching back three years to check if one of the world's largest quant trading firms intended to manipulate the country's benchmark stock indexes, according to two sources with direct knowledge of the matter.
The investigation - the largest such into a global trading firm - follows a series of steps taken by the
Securities and Exchange Board of India
(SEBI) to cool the frenzy in India's derivatives markets.
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
One of the Most Successful Investors of All Time, Warren Buffett, Recommends: 5 Books for Turning...
Blinkist: Warren Buffett's Reading List
Click Here
Undo
SEBI is investigating Jane Street, Jane Street Singapore Pte and JSI Investments, the firm's India unit, and studying the firms' algorithmic trading strategies in the National Stock Exchange's index of top 50 stocks and its index of banking stocks, one of the sources said.
Play Video
Play
Skip Backward
Skip Forward
Mute
Current Time
0:00
/
Duration
0:00
Loaded
:
0%
Stream Type
LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
1x
Playback Rate
Chapters
Chapters
Descriptions
descriptions off
, selected
Captions
captions and subtitles off
, selected
Audio Track
Picture-in-Picture
Fullscreen
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text
Color
White
Black
Red
Green
Blue
Yellow
Magenta
Cyan
Opacity
Opaque
Semi-Transparent
Text Background
Color
Black
White
Red
Green
Blue
Yellow
Magenta
Cyan
Opacity
Opaque
Semi-Transparent
Transparent
Caption Area Background
Color
Black
White
Red
Green
Blue
Yellow
Magenta
Cyan
Opacity
Transparent
Semi-Transparent
Opaque
Font Size
50%
75%
100%
125%
150%
175%
200%
300%
400%
Text Edge Style
None
Raised
Depressed
Uniform
Drop shadow
Font Family
Proportional Sans-Serif
Monospace Sans-Serif
Proportional Serif
Monospace Serif
Casual
Script
Small Caps
Reset
restore all settings to the default values
Done
Close Modal Dialog
End of dialog window.
"The investigation is to establish whether there was a repeated pattern of taking outsized derivatives positions in index constituents, particularly bank stocks, then trade the index in the physical market to profit from its position," the source said.
While India does not impose any restrictions on traders from taking intraday positions in derivative as well as physical markets, surveillance systems typically signal repeated patterns of taking positions in excess of 10 billion Indian rupees ($116.93 million).
Live Events
A report is being prepared with assistance from the stock exchange, following which the U.S.-based trading firm will be sent a regulatory notice to explain its trades.
The sources declined to be named as the investigations are confidential. Jane Street and SEBI did not respond to several requests for comment.
The investigation stemmed from large profits made by Jane Street on its India derivatives positions - nearly five times the profit made by the second largest trading firm, the second source said.
Known for
high-frequency trading
and its dominance of the exchange traded funds market, Jane Street's net trading revenue for 2024 stood at $20.5 billion globally, according to Bloomberg. As of December 2024, the firm's revenue from India operations stood at 200 billion Indian rupees ($2.34 billion), the second source added.
The firm started its India operations in December 2020.
Complaints from other large institutional firms on Jane Street's trade practices also prompted the investigation, the sources said.
Jane Street last year sued a rival hedge fund, Millennium Management, accusing it of stealing a valuable in-house trading strategy. At a court hearing, it was revealed that the strategy involved India options and had generated $1 billion in profits for Jane Street in 2023. The two firms settled the case in December.
INCREASED SCRUTINY
The investigation has also prompted SEBI to increase monitoring of intraday positions to watch for large concentrated trades in index stocks, the two sources said.
SEBI and stock exchanges are currently drafting a mechanism to do this, said the sources, adding that large positions for consecutive days could prompt investigation.
The thresholds for such investigations are still being finalised.
Exchanges will also be asked to periodically audit algo programs of large trading firms, which are already required to get approval from exchanges before using the programs.
($1 = 85.8370 Indian rupees)

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Economic Times
20 minutes ago
- Economic Times
Disruption of rare earth magnet supplies beyond 30 days can impact vehicle production in India: Report
Agencies Representative image. A disruption in rare earth magnet supplies lasting beyond a month can impact production of passenger vehicles, including electric models, weighing on the domestic automobile industry's growth momentum, a report on Tuesday said. Rare earth magnets, low in cost but critical in function, could emerge as a key supply-side risk for India's automotive sector if China's export restrictions and delays in shipment clearances persist, Crisil Ratings said in a statement. "The supply squeeze comes just as the auto sector is preparing for aggressive EV rollouts. Over a dozen new electric models are planned for launch, most built on PMSM platforms," Crisil Ratings Senior Director Anuj Sethi said. While most automakers currently have 4-6 weeks of inventory, prolonged delays could start affecting vehicle production, with EV models facing deferrals or rescheduling from July 2025, he added. A broader impact on two-wheelers and ICE PVs may follow if the supply bottlenecks persist for an extended period, Sethi said. "The shortage of rare earth magnets is forcing automakers to reassess supply-chain strategies. Despite contributing less than 5 per cent of a vehicle's cost, these magnets are indispensable for EV motors and electric steering systems," said Crisil Ratings Director Poonam Upadhyay. Automakers are actively engaging with alternative suppliers in countries such as Vietnam, Indonesia, Japan, Australia, and the US, while also optimising existing inventories, she noted. "With applications across EVs and ICE vehicles, a prolonged supply squeeze could disrupt production of PVs and 2Ws, making this low-cost component a potential high-impact bottleneck for the sector," she said. Rare earth magnets are integral to Permanent Magnet Synchronous Motors (PMSMs) used in EVs for their high torque, energy efficiency and compact size. Hybrids also depend on them for efficient propulsion. In internal combustion engine (ICE) vehicles, the use of rare earth magnets is largely limited to electric power steering and other motorised systems. In April this year, China, the world's dominant exporter of rare earth magnets, imposed export restrictions on seven rare earth elements and finished magnets, mandating export licences. The revised framework demands detailed end-use disclosures and client declarations, including confirmation that the products will not be used in defence or re-exported to the US. With the clearance process taking at least 45 days, this added scrutiny has significantly delayed approvals. And the growing backlog has further slowed clearances, tightening global supply chains. India, which sourced over 80 per cent of its 540 tonnes magnet imports from China last fiscal, has started to feel the impact. By end-May 2025, nearly 30 import requests from Indian companies were endorsed by the Indian government, but none have yet been approved by the Chinese authorities, and no shipments have arrived. During the pandemic, rare earth magnet supplies remained stable, unlike semiconductors, reinforcing reliance on just-in-time inventory without building strategic buffers. However, while semiconductors have a globally diversified supply base, over 90 per cent of rare earth magnet processing is concentrated in China, with limited short-term alternatives. Recognising the risk, the government and automakers are taking action on two fronts, Crisil said. In the short term, the focus is on building strategic inventories, tapping alternative suppliers and accelerating domestic assembly under Production Linked Incentive schemes. For the long term, reducing import dependency will hinge on fast-tracking rare earth exploration, building local production capacity and investing in recycling infrastructure, Crisil stated.


New Indian Express
30 minutes ago
- New Indian Express
Maharashtra government hikes liquor taxes to raise ₹14,000 crore in annual revenue
MUMBAI: The Maharashtra state cabinet on Tuesday approved a significant increase in excise duty on liquor, aiming to boost revenue by approximately ₹14,000 crore per year . The state cabinet approved the Excise Department's recommendations after a secretary-level study group reviewed best practices from other states. The group proposed measures to expand liquor production, streamline licensing, and enhance excise duty and tax collection. Key decisions approved by the cabinet Excise duty increases: Indian-Made Foreign Liquor (IMFL) up to ₹260 per bulk litre will now be taxed at 4.5× the declared production cost, up from the previous 3×. Country liquor duty has increased from ₹180 to ₹205 per proof litre. New Maharashtra-Made Liquor (MML): A new category of grain-based foreign liquor, to be produced exclusively by Maharashtra distillers. Manufacturers must register their MML brands separately. Revised minimum retail prices for 180 ml bottles: Country liquor: ₹80 MML: ₹148 IMFL: ₹205 Premium foreign liquor: ₹360 Licensing amendments: Sealed foreign liquor shops (FL-2) operating under lease agreements will incur a 15% increase in annual license fees. Hotel/restaurant licenses (FL-3) on the same basis will face a 10% fee hike Strengthening the excise department:


Economic Times
30 minutes ago
- Economic Times
Zerodha's Nithin Kamath hails SCRA rule clarification for stock brokers, "huge" for Rainmatter. Here's why
Zerodha Founder & CEO Nithin Kamath on Tuesday lauded Indian finance ministry and NSE for clarification of SCRA rules enabling stock brokers to invest their own funds without exchange approvals or restrictions. Calling it huge for Rainmatter, an initiative by Zerodha which supports and invests in Indian startups, Kamath said that Zerodha will now be able to allocate more capital to support domestic startups directly from the brokerage entity. ADVERTISEMENT "Finally, after clarification of SCRA rules by @FinMinIndia and NSE, brokers can now invest their own funds without exchange approvals or restrictions. This is huge for @Rainmatterin. We can now allocate more capital to support Indian startups directly from the brokerage entity," Kamat tweeted on his official X handle. The government had in May, amended the Securities Contract (Amendment) Rules to give regulatory clarity and enhance ease of doing business for stock brokers. "Amendment gives regulatory clarity to enhance ease of doing business for brokers," the finance ministry said. Through a circular issued on May 16, the Ministry of Finance recently changed certain rules about how stockbrokers can invest their own money. The main point of the change is that when a stockbroker invests his own money, it will generally not be considered as part of their "broking business" subject to certain conditions.'Provided further that investments made by a member shall not be construed as business except when such investments involve client funds or client securities or relate to arrangements which are in the nature of creating a financial liability on the broker,' the clarification said. The government amended the rules by inserting this provision in Rule 8 of the Securities Contracts (Regulation) Rules, means they won't have to follow the same strict rules that apply to client-related transactions. ADVERTISEMENT However, there are exceptions to this rule. If the investments made by stock brokers involve client money or client securities, or if these investments create a financial risk for their brokerage firm, then these investments will still be treated as part of their business and subject to the usual rules.'Provided further that investments made by a member shall not be construed as business except when such investments involve client funds or client securities or relate to arrangements which are in the nature of creating a financial liability on the broker,' the clarification said. ADVERTISEMENT Also Read: Zerodha's MTF bet pays off, touches Rs 3,000 crore in 6 months despite a bear market: Nithin Kamath (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times) ADVERTISEMENT (You can now subscribe to our ETMarkets WhatsApp channel)