Jane Street trading probe: IT raids Nuvama Wealth, formerly Edelweiss Broking

Time of India

21 hours ago

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Rs 36,500 Crore in Profits, Scrutiny Over Expiry-Day Strategies
Systemic Impact and Sebi's Red Flags
The Income Tax Department on Thursday launched search operations at the offices of Nuvama Wealth and Investment Limited, formerly known as Edelweiss Broking, in connection with the Jane Street matter. Nuvama had served as the global firm's on-ground trading partner in India.The case marks one of the most significant enforcement actions in Indian capital markets in recent years. Jane Street was barred from trading earlier this month after Sebi levelled allegations of market manipulation, which led to disruptions in the derivatives segment.Following the trading ban, the NSE saw a notable drop in index options premium turnover—a key indicator of market risk appetite. On July 17, turnover fell to ₹39,625.77 crore, a 35% decline from the June average of ₹60,605 crore. Expiry-day volumes have continued to fall throughout July, highlighting the impact of Jane Street's absence.However, Jane Street was permitted to re-enter Indian markets. On July 21, The Economic Times reported that the firm had complied with the Securities and Exchange Board of India's (Sebi) directive to deposit alleged 'unlawful gains' amounting to ₹4,844 crore in an escrow account before the July 14 deadline.According to a Business Standard report, Sebi issued formal communication confirming that the restrictions on Jane Street's access to the Indian securities markets have been lifted. This followed Sebi's interim order dated July 3, which stated that 'upon deposit compliance, the restriction on accessing the securities market will cease to apply.'Separately, Reuters reported, citing sources, that the National Stock Exchange (NSE) and BSE have been instructed to closely monitor Jane Street's market activities.While regulatory clearance has been granted, Reuters quoted a second source stating that Jane Street has provided an undertaking to Sebi that it will refrain from options trading. The firm also does not intend to trade in the cash segment until it has clarified its trading strategies to the regulator.Sebi's investigation revealed that Jane Street amassed staggering profits of Rs 36,502.12 crore between January 2023 and March 2025. Of this, Rs 43,289 crore came from index options, while the firm incurred losses of Rs 7,687 crore in the cash and futures segments. Sebi ordered Rs 4,840 crore of these gains to be frozen, citing them as unlawful.The market watchdog alleged that Jane Street engaged in a sophisticated scheme to manipulate index movements—particularly the Nifty and Bank Nifty—on expiry days. According to Sebi, the firm repeatedly ran 'by far the largest risks in 'cash-equivalent' terms in F&O,' and its pattern of trading was 'prima facie manipulative' due to the 'intensity and sheer scale of their intervention.'On January 17, 2024, Jane Street reportedly earned Rs 734.93 crore in a single day by executing what Sebi described as a deliberate strategy. The firm aggressively bought Rs 4,370 crore worth of Bank Nifty stocks and futures in the morning to push the index up, while simultaneously holding bearish positions in options. By reversing these trades in the afternoon, the firm triggered a sharp index fall, resulting in massive profits on the options side.Over the course of its probe, Sebi reviewed 18 expiry-day trades and found manipulative strategies in 15 of them. These included a 'pump-and-dump' playbook and, in some cases, heavy sell orders at the close to push the index down.Jane Street allegedly executed aggressive trades in over 40 large-cap stocks—including Reliance, TCS, SBI, HDFC Bank, and Infosys—to influence index levels. Sebi said the firm's actions misled retail traders, who interpreted the artificial index moves as genuine market signals.Despite receiving a cautionary letter via the NSE in February 2025, Jane Street continued with its strategies. The National Stock Exchange eventually closed its own probe after receiving a response from the firm's Indian partner, Nuvama. But Sebi proceeded with enforcement, citing ongoing violations and systemic risk.As of 2:36 PM on July 31, shares of Nuvama Wealth Management were trading at Rs 7,291.5 apiece, down Rs 119.60 or 1.61%.