Jane Street Likely To Cite Retail Frenzy Behind India Trades: Report
New York-based trading firm Jane Street Group is expected to argue that its contentious trades in India's options market were driven by strong demand from retail investors, Bloomberg News reported on Monday, citing sources familiar with the matter.
Earlier this month, the Securities and Exchange Board of India (SEBI) issued an interim order barring Jane Street from participating in the Indian securities market. The regulator alleged that the firm used manipulative strategies to influence the Bank Nifty index—buying large volumes of constituent stocks in both cash and futures markets during early trading hours, while simultaneously shorting index options. SEBI claimed the approach resulted in losses for retail investors.
Jane Street, however, had its trading ban lifted last week after depositing $567 million in escrow. On Monday, the firm confirmed that it has requested additional time to formally respond to the interim order.
According to Bloomberg, Jane Street is likely to claim that it aimed to facilitate options bets from Indian retail investors, despite limited hedging opportunities. The firm reportedly plans to argue that it deliberately adopted a less aggressive hedging strategy in India than in other global markets. Specifically, it is expected to say it spread its hedging activity over several hours on January 17, 2024—its most profitable day during the two-year period under review—to minimize its impact on the market.
US high frequency trading firm Jane Street has sought more time from Indian market regulator Securities and Exchange Board of India (Sebi).
In its statement on Monday evening, Jane Street Group said, 'We are engaging constructively with SEBI and have sought an extension to respond to the interim order issued on July 3."
In its July 3 interim order, Sebi had given 21 days to reply. It seems the extension has been sought after expiry of this timeline. Jane Street did not disclose how much extension in timeline it has sought to respond to Sebi's queries.
In the same statement, Jane Street assured that the group is committed to the integrity of the market. The statement further said, : Jane Street is committed to conduct that upholds the integrity of India's capital markets and contributes to their continued development."
Sebi, in its July 3 order, had alleged that Jane Street Group manipulated the trades on Bank Nifty and Nifty Index Options and made an illegal gain of Rs 4,843.5 crore as per the preliminary investigation. Sebi directed Jane Street Group to impound and deposit the alleged illegal gains in an interest-bearing escrow account with lien marked in favour of Sebi.
Jane Street complied with the Sebi directions on impounding of alleged illegal gains on July 11. Later, On July 21, Sebi lifted the restrictions on Janes Street's trading in Indian markets, subject to conditions that it will not manipulate and exchanges will have a hawk eye on the trades of Jane Street Group.
Sebi statement issued on July 21 noted the entities have been directed to cease and desist from directly or indirectly engaging in any fraudulent, manipulative or unfair trade practice or undertaking any activity, either directly or indirectly, that may be in breach of extant regulations, including by dealing in securities using any of the patterns identified or alluded to in the interim order.
The entities have confirmed that they will comply with this. Stock exchanges were directed to closely monitor any future dealings and positions of Jane Street Group on an ongoing basis. So that entities do not either directly or indirectly indulge in any kind of manipulative activity, including by dealing in securities using any of the patterns identified or alluded to in the interim order, till the completion of the investigation by SEBI and the consequent proceedings, if any.
Jane Street Group had earlier denied the allegations of Sebi and said its trading strategy has been misunderstood by the Indian capital market regulator.
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July 29, 2025, 11:14 IST
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